THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
(COMMERCIAL DIVISION)
MISCELLANEOUS APPLICATION NO. 0073 OF 2011
[ARISING FROM CIVIL SUIT NO. 0031 OF 2011]
BOB KASANGO:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::APPLICANT
VERSUS
PAUL NALUKOOLA MUWANGA :::::::::::::::::::::::::::::::::RESPONDENT
BEFORE: HON. LADY JUSTICE IRENE MULYAGONJA KAKOOZA
RULING
The applicant, Mr. Bob Kasango, is an advocate of the courts of Judicature in Uganda. He brought this application under Order 36 rules 3(1) and 4 of the Civil Procedure Rules (CPR). He sought for unconditional leave to defend a suit brought under summary procedure to recover a sum of shs. 765m together with interest thereon at the rate of 7.5% per month, which the respondent claimed was due from him as his advocate, per contract dated 4/08/2010. The application was supported by the affidavit of the applicant deposed on 7/02/2011. The respondent filed an affidavit in reply which he deposed 16/03/2011.
The applicant’s affidavit was long and extremely detailed. He tried to render an account of the sum of shs. 8,172,000,000/= which the respondent and one Joe Muganzi retained him to collect and how he had disbursed it. I thought that the relevant facts to this application were that he admitted that on 4/08/2010, he entered into an agreement to pay the amount claimed by the respondent to him as stated in the plaint, but the circumstances were such that he did so in error. He averred that the execution of the agreement was in the midst of defending himself over false accusations of a similar nature made against him by the Queen Mother of Tooro. That he was at the time the subject of negative publicity and had just been released from arrest and detention and the last thing he wanted was further adverse publicity. He further averred that the respondent and the Queen Mother’s advocates had agreed to maliciously damage his reputation by having the respondent make a similar claim against him. He went on and averred that he knew about the intentions of the respondent to maliciously damage his reputation. That he had no access to his accounts at the time and so executed the agreement in error, under the mistaken belief that he so owed the respondent.
The applicant further averred that after he signed the agreement on 4/08/2010, he was able to retrieve his bank statements and other files and reconcile accounts. That he then found that he had paid the respondent all that he owed him and was thus vindicated. Further that subsequent to the execution of the agreement he met with the respondent and his lawyers and brought it to their attention that he owed the respondent nothing but they did not believe him. They instead sued him on the basis of the erroneous agreement.
In his affidavit in reply the respondent averred that due to the fact that he is an advocate, it was untenable to believe that the applicant signed an agreement admitting liability for a debt to a client without first ascertaining what he owed from his records. Further that he was advised that under provisions of the Advocates Act and Regulations, Advocates are required to keep a client’s bank account and to deposit thereon only monies held on account of clients; that because of this, the applicant could not claim that he was mistaken about the amount that he owed to a client.
The respondent further averred that the time between the meeting at which the applicant met with the respondent and his advocates (27/07/2010) was more than a week before the signing of the contested agreement on 4/08/2010. That the applicant had every opportunity to reflect on documenting the admission that he intended to make as to his indebtedness and to cross check with his records including bank statements, before signing the agreement. The respondent charged that the defence that the applicant signed the agreement in error was an afterthought. The respondent further challenged the attempts at rendering an account and the agreements referred to by the applicant in his affidavit. He averred that the said agreements pre-dated the contested agreement and that the applicant signed the contested agreement very well knowing that they existed. He further averred that the applicant had no defence to the suit and judgment should be entered against him, otherwise the advocate’s fiduciary relationship of utmost good faith between him and client would be rendered redundant, a fact which would not augur well with the legal profession.
At the hearing of the application, Mr. Godfrey Lule who represented the applicant submitted that on an application for leave to defend, the applicant is required to show that there is a bona fide triable issue to be decided by the court. He relied on the decision in Abubakar Kato Kasule v. Tomson Muhwezi [1992-1993] HCB 212. He further submitted that at this stage the applicant was not bound to show that he has a good defence to the suit but that he ought to satisfy court that there is a prima facie triable issue in dispute which court ought to determine between the parties.
Mr. Lule advanced the triable issue as an investigation into whether the applicant still owed the respondent money as claimed or not. He went to submit that at this stage, the court was not entitled to enquire into the merits of the issues raised and that if the applicant showed that he has a plausible defence, then he ought to be granted unconditional leave to defend the suit. He also drew court’s attention to the decisions in Maluku Interglobal Trade Agency v. Bank of Uganda [1985] HCB 65, and George William Semivule v. Barclays Bank of Uganda; UCC M/A 267/2008 (unreported).
In reply, Mr. Timothy Masembe relied on the decision in Abukakar Kato Kasule (above) and submitted that though the applicant was not bound to show that he has a good defence on the merits, he ought to satisfy court that there is a prima facie triable dispute which the court ought to determine between the parties. Further that in the same case it was held that the court should study the grounds raised which in his view meant that court must critically examine them to ascertain whether there is a real issue or a defence which is was just a sham.
Mr. Masembe further submitted that the office of advocate carries special responsibility and in examining whether or not the applicant’s defence was a sham or not one would have to consider the advocates obligations. He pointed out that in this case, the advocate was asking court to believe that at the time he signed the contested agreement he had no access to his firm’s bank statement with Standard Chartered Bank. He submitted that it would require one to stretch their imagination to bring to mind a situation where a client has no access to his/her statement at a bank. He went on to submit that in fact, the statements from bank accounts would not be the first point of call where an advocate wishes to establish what is owed to a client because the Advocates Act, in particular s.40 thereof, requires advocates to keep accounts in compliance with the Advocates Accounts Rules and the Advocates Trust Accounts Rules.
Mr. Masembe went on to refer court to rule 1(e) of the Advocates Accounts Rules for the definition of client’s money, and to rule 2 thereof which requires an advocate to keep separate accounts for clients’ monies. He also referred to rule 5 of the same Rules which prohibit the mixing of other monies with clients’ monies in the clients’ account. He also drew court’s attention to rule 7(2) of the Advocates Accounts Rules which provides for the circumstances under which money may be drawn from the clients’ account. He then submitted that it was untenable that an advocate would enter into an agreement admitting that he owed shs. 765m, specify the date he would pay it by and also that he would pay interest, when he had not cross-checked this with his ledgers. He concluded that the defence advanced by the applicant was a sham,
Mr. Masembe finally referred to Treitel’s “The Law of Contract” (7th Edition) for the submission that as a general rule, a person is bound by his signature to a document whether he has read it and understood it or not. He further submitted that the only defence available in such circumstances is that of non est factum, the plea that the deed mentioned in the pleading is not the defendant’s deed. He went on to explain that the doctrine is restricted in its operation to certain categories of persons: for example “those who are permanently or temporarily unable through no fault of their own to have without explanation any real understanding of the purport of a particular document, whether that be from defective education, illness or innate incapacity.” Further that the doctrine would apply to those who have been tricked into signing a document. He went on to state that the defence of non est factum would of necessity be available only to persons who could never obtain a certificate of eligibility to become advocates in this jurisdiction.
In conclusion, Mr. Masembe stated that nothing else had been proffered as a defence by the applicant save that he did not have access to his books of account and bank statements to enable him to reconcile accounts before he signed the agreement and therefore he signed in error. He finally submitted that if nothing else other than the issue above had been raised, then on authority of Abubakar Kato Kasule (above) leave could not be granted to the applicant to defend the suit and judgment should be entered against him for the sum claimed in the plaint.
In rejoinder, Mr. Lule submitted that 90% of Mr. Masembe’s arguments in reply related to the merits of the case which was not the purpose of an application for leave to appear and defend. He reiterated that all that was required of the applicant at this stage was stated in Order 36 CPR; that the circumstances under which the debt arose were immaterial to the dispute at this point; that the applicant had stated why he must not pay the debt and he could not substantiate the defence in this application and so required leave to file a defence; that evidence could not be adduced at this point, but that with the bank statements on record together with the other documents attached to the applicant’s long affidavit, it could not be said that his defence was a sham.
There is a long line of authorities to the effect that on an application for leave to defend a suit, the applicant has got to 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 ruled that a defendant who has a stateable and arguable defence must be given the opportunity to state and argue it before court. The High Court of Uganda followed that decision in Maluku Interglobal Trade Agency v. Bank of Uganda [1985] HCB 65, at 66 where the principle was succinctly laid down 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 plaintiff 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.”
The applicant in the instant case says he has a defence to the suit and it is that he had paid off all monies that he, in his capacity as an advocate, owed to the respondent. He proposes, as is shown in his affidavit in support, to adduce evidence of the accounts as is represented by bank statements and agreements between the respondent and he. He also proposes to prove on that basis that he executed the agreement dated 4/08/2010 (Annexure “B” to the respondent’s affidavit in reply) in error when he did not have access to his accounting records. The two proposed facts do raise a defence and triable issues, where it not for the cloud of the clear and unequivocal contents of the contested agreement hovering over it.
The respondent on the other hand says that the applicant did sign the contested agreement very well knowing that he did owe him the amount claimed in the plaint. That as an advocate, he was bound by it because he could not have signed the agreement if he had any doubts that he owed the amount claimed by the respondent. Mr. Masembe for the respondent has made out a case that the applicant’s defence is a sham and should be ignored by this court so that judgment is given to the respondent for the amount stated in the contested agreement and interest thereon. The principles of law that he stated with authority cannot be faulted for they are convincing. But there is a middle ground to the whole situation that will, I believe satisfy both the interests of justice, to see that the applicant is given an opportunity to defend the suit, however incredible his defence seems, as well as ensuring that he is not only delaying the course of justice. I shall next expound the principles relating to that middle ground.
The applicant is an advocate of this court. It is therefore incumbent upon this court to ensure that he does not abuse the process of this court merely to gain time to lead a defence that appears to borderline, only to delay or defeat the ends of justice. In Churanjilal & Co. v. Adam (above), the applicant appealed against the decision of the Supreme Court of Kenya which gave judgment after finding that he had not clearly articulated a defence. The court found that there was a definite triable issue though the dispute was a borderline case. The court then ruled that the appellant should be allowed to argue his defence in the court below, but upon depositing security to the satisfaction of the court below for the amount of the claim and costs due, within a reasonable time.
The case now at bar is also a borderline case; the advocate who brought this application desires to challenge an agreement that he entered into to pay his client monies that he thought were due to him. He did this while he was his right senses and without coercion or undue influence, but claims that it was entered into in error, without consulting his records. It is an effort which appears to be contrary to all recognised authority under common law. The advocate also alleges that his client wants to “finish him off” and he intends to do this in concert with another client who has a similar claim against him. This court would not want to be seen to be hounding the applicant and denying him access to justice or joining his client in his efforts to “finish him off.”
For those reasons, I will exercise my discretion to allow the applicant to defend the suit but only on condition that he deposit security in this court of the amount owed to the respondent together with the interest due so far. The applicant may deposit security in this court in the form of a bankers’ cheque in favour of the court for the amount claimed with interest. He may in the alternative deposit a guarantee in favour of the respondent equivalent to the amount claimed with interest. Both the guarantee and bankers’ cheque, whichever one he chooses, should be from a reputable bank and valid for at least one year. In the alternative, he may deposit certificates of title in his name of property of a value that is commensurate to the respondent’s claim. He shall deposit the chosen security, which shall be to the satisfaction of the registrar, within a period of one month from the date of this ruling, i.e. by the 13/05/2011, before close of business. In the event that he fails to do so, judgment shall be entered for the respondent as prayed, in default of filing a defence. The costs of this application shall abide the result of the main suit.
Irene Mulyagonja Kakooza
JUDGE
14/04/2011
