THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

[COMMERCIAL COURT]

MISC. APPL NO.363 OF 2013

[ARISING OUT OF C.S NO 60 OF 2013]

BROADBAND COMPANY LTD :::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT

VERSUS

JORAM MUGUME ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT

BEFORE HON. JUSTICE B. KAINAMURA

RULING

The Applicant applied by Notice of Motion under O.36 CPR for leave to appear and defend Civil Suit No. 60 of 2013 and for costs. The grounds for the application are that the Applicant/Defendant has no contract with the Respondent to warrant rental payment obligations, the applicant is not liable to the respondent in the sum claimed in the plaint, that consequently the plaint raises a number of triable issues of fact and law and the Applicant/Defendant has a plausable defence to the suit and that it would be in the interest of justice that the prayers sought are granted.

The application is supported by the affidavit of One Edmond Oduka the Chief Operations Officer of the applicant. Mr. Oduka depones that the applicant has no contract with the respondent to warrant rental payment obligations. Mr. Oduka adds that on 19^th December 2011 TMP Uganda Ltd was placed under voluntary liquidation with intention of winding it up. The applicant bought some assets of TMP Uganda Ltd which assets were in the suit premises. On29th January 2012 when the applicant’s workmen and servants went to the suit premises to remove the equipment, they were prevented from doing so despite the fact that the respondent had earlier agreed to the removal. The respondent demanded that his property had to be restored first as required by the contract between the respondent and TMP Uganda Ltd.  

In reply Mr. Joram Mugume the respondent depones that the applicant voluntarily agreed to fulfill the obligations of TMP Uganda Ltd under its tenancy agreement with him. Further that the applicant did in fact occupy the suit premises. He concludes by stating that the applicant has no defence to the claim and the appreciation is brought in bad faith. In rejoinder, Mr. Oduka depones that the applicant has never physically occupied the suit premises as he was forcibly denied entrance by the respondent despite the fact that the applicant had paid rent for the months of January to May 2012. Mr. Oduka further contends that the plaint is incurably bad in law as it seeks to recover interest which is not provided for in the tenancy agreement.

At the hearing of the application, Daniel Muzora represented the applicant while Enos Tumusiime represented the respondent.

Counsel for the respondent informed court that his client was prepared to concede to the application provided the applicant/defendant deposited the sums prayed for in the plaint in court. On his part Counsel for the applicant requested court not to impose the condition prayed for by the respondent. It was agreed that both Counsel submit written submissions on whether the leave to defend should be conditional or not.

In his written submissions Learned Counsel for the applicant set out the principles for determination to arrive at a decision of whether leave should be granted to the defendant to appear and a defend a summary suit as enunciated in the case of Miter Investment Ltd Vs East African Portland Cement Company Ltd HCMA 336 of 2012. The principles are:-

1. An applicant for leave to defend a summary suit must demonstrate to court that there is or are issues or questions of fact or law which are in dispute and which ought to be tried.
2. Where the applicant shows a state of facts which leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff’s claim, he ought not to be debarred of all power to defende the demand made upon him.
3. Where the court is doubtful whether the proposed defence is being made in good faith, the court may order the defendant to deposit money in court before leave is granted.
4. Whether there is a genuine defence either in fact or in law, the defendant is entitled to unconditional leave to defend.
5. General allegations however strongly may be the words in which they are stated, are insufficient to amount to an averment of fraud of which any court ought to take notice.

Basing on the above principles, Learned Counsel for the applicant submitted that according to the affidavit in support of the application, the applicant has no subsisting contract with the respondent from which rental payment accrues, that notwithstanding the applicant has fully paid the rent arrears due and owing from TMP Uganda Ltd and that the applicant disputes the amount (any and all monies) of money claimed by the respondent as rent thereby raising a triable issue that warrants the grant of unconditional leave to defend. Further Counsel urges that the respondent claims US $ 46000 which should carry interest at the prevailing Commercial Bank lending rate from date of Judgment till payment in full, a claim that cannot be sustained at law since interest cannot be claimed in a suit under      O 36 CPR, unless it is based on an agreement for interest in the document sued on. Counsel adds that since the tenancy agreement executed with TMP Uganda Ltd or the undertaking executed with the applicant does not provide for interest, then this is a triable issue and as such the applicant is entitled to unconditional leave to appear and defend.

Counsel concluded by asserting that as a general rule, leave to defend should be given unconditionally unless there is a good ground of thinking that the defences put forward are no more than a sham. He cited the case of Souza Figuerido & Co Ltd Vs Moorings Hotel Co. Ltd [1959] EA 425. Counsel invited court to find that the applicant in this application raises plausible defence to the respondents claim and granting the applicant conditional leave to appear and defend would be unjust.

On his part Learned Counsel for the respondent argues that the applicant by an undertaking dated 27^th February 2012 undertook to fulfill all the obligations of TMP Uganda Ltd and that the payment of US $ 17250 did not settle all the obligations of TMP Uganda Ltd as the rent due to the respondent’s suit.

Further that it is not true that the applicant did not occupy the respondents premises and there is a contractual basis for the respondents claim. On claim for interest, Counsel urges that the interest prayed for, is from the date of judgment till payment in full and as such it is interest on a liquidated sum which is permissible in law. Counsel concludes that if court is inclined to grant the applicant leave to appear and defend, then owing to the fact of the bad faith in the applicant’s affidavits, the applicant should be ordered to deposit in court the sum claimed before filling the WSD.

As earlier stated in this ruling, it was agreed by both Counsel at the hearing that the applicant be granted leave to appear and defend the suit. The only point of departure was whether the leave should be conditional or unconditional.

Of particular relevance in determining this application among the principles outlined above is (c) and (d). In principle (c) where the court is doubtful whether the proposed defence is being made in good faith, it may order the defendant to deposit money in court before leave is granted. Further in principle (d) where court determines that there is a genuine defence either in fact or in law, then the defendant is entitled to unconditional leave to defend.

In Souza Figuerido & Co Ltd Vs Moorings Hotel Co Ltd (supra) Sir Kenneth O’Connor P had this to say:-

“The principle on which the court acts is that where the defendant can show by affidavit that there is a bonafide triable issue, he is to be allowed to defend as to that issue without condition……………….. A condition of payment into court ought not to be imposed where a reasonable ground of defence is set up………..”

A close look at the affidavit of Edmond Oduka Chief Operations Officer of the applicant points to the following:-

1. There is no contract between the applicant and the respondent to warrant rental payment obligations.
2. The claims against TMP Uganda Ltd should have been handled by the liquidator.
3. The applicant undertook to settle un fulfilled rent obligations of TMP Uganda Ltd which has been done.
4. The respondent is holding the applicant’s equipment illegally.

To my mind, what is outlined above and in the rest of the applicant’s affidavits bring out issues both of fact and law which are bonofide triable issues in its defence. The respondent’s case is premised on the undertaking given by the applicant. I have had a look at the undertaking and I am of the view that the undertaking itself raises serious questions of law which also need to be addressed at a trial where the suit is denfeded.

Accordingly i am of the opinion that the applicant has shown that there are bonafide triable issues and should be allowed to defend itself without imposing any conditions on it. 

In the circumstances the following orders shall issue;

1. The defendant is granted unconditional leave to file a defence within 14 days from the date of this order.
2. Costs of this application shall abide the final outcome of the suit. 

      ____________________

B. Kainamura

Judge

18.09.2013

18-09-2013 at 3pm

Daniel Muzoora Counsel for Applicant

Enos Tumusiime Counsel for Respondent

Respondent present in Court

Applicant absent in Court

Sauda Nansubuga                 Court Clerk

Ruling delivered in Chambers

B. Kainamura

Judge

18-09-2013