THE RUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISC. APPLICATION 542 OF 2014

 (ARISING FROM CIVIL SUIT NO. 356 OF 2014)

RAHA GLOBAL HOLDING COMPANY LTD .……………..APPLICANT

VERSUS

COMESA COMMERCIAL COMPANY LTD  …………… RESPONDENT

BEFORE HON. LADY JUSTICE FLAVIA SENOGA ANGLIN

RULING

By this application made under S.98 and S. 26 C.P.A, 0.36 r 3 and 0.52 rr 1 and 3 C.P.R, the Applicant sought to be granted unconditional leave to appear and defend civil suit 356/2014.

Costs of the application were also applied for.

The application was supported by the affidavit of Mohamed Rafi, the Managing Director of the Applicant Company.  There is an affidavit in reply sworn by Okba Michael Ymesgan, Director of the Respondent Company.  And an affidavit in rejoinder deponed by Mohamed Rafi.

When the application was called for hearing on 16.10.14, Counsel for the Respondent indicated that he would wish to cross examine the deponent of the supporting affidavit to the application, as earlier indicated.  However, court decided to go ahead with hearing of the application without the cross examination being conducted.

Presenting the application, Counsel for the Applicant referred to the grounds set out in the motion and the supporting affidavit, arguing that the cheques issued to the Respondent were issued as security.  And that balance was due to be paid after delivering of the goods.

Further that balance was not paid as Respondent sold the goods to someone else with whom the Applicant has no connection.

Citing the case of Sterling Travel and Tour Services Ltd vs. Millenium Travel and Tours Services Miscellaneous Application 116/13, Counsel stated that    “At this stage, court is not required to inquire into the merits of the issues raised, though the issues should be real and not sham.  And upon finding that there is a plausible defence, the application should be allowed unconditionally.”

The case of Miter Investments Ltd vs. EA Portland Cement Co. Ltd was relied upon for the principles upon which leave to defend should be granted.  These are:-

1. There is an issue or question of law or fact to be tried and which ought to be investigated.
2. Applicant should show that there is a defence to the claim. (In the present case that cheques did not bounce but were stopped by the Applicant)
3. When in doubt – matter should be decided on balance of probabilities and Applicant asked to deposit the money demanded in court.

Counsel argued that in the present case, it would be unfair to require Applicant to deposit money as Respondent already holds money paid by the Applicant.

It was then prayed that the Applicant be given a chance to file defence and also recover what has already been paid to the Respondent.

In reply, Counsel for the Respondent submitted that he agreed as to the principles upon which application should be granted.  However, that the evidence shows there was a contract, cheques were issued and goods not received.  But that documents show Applicant paid another Company and there is no proof that taxes were paid since the goods were to be exported.

Further that there is no evidence that Applicant requested for delivery of goods.  He insisted that cheques were issued by Applicant and dishonored; adding that, in the circumstances the Applicant is making general denial and had not attached a copy of the proposed defence or shown any effort made to try and recover the goods.

While admitting that affidavit in reply “discloses triable issues”, in the same breath, Counsel argued that court must be satisfied that the issues to be tried are real and not sham.  He relied upon the case of Maluku Interglobal Agency vs. Bank of Uganda

Adding that since Applicant admits that cheques were issued, the application should be dismissed and judgment entered with costs.

In the alternative, Counsel prayed that if court finds that there are triable issues; leave granted should be conditional upon the Applicant disposing $48,000 in court. Arguing that Applicant is a foreigner and majority shareholder in the Defendant Company and if money is not deposited, the Respondent may not be able to recover.

Counsel for the Applicant reiterated earlier prayers.

Upon giving the submissions of both Counsel the best consideration, I can in the circumstances, I must state that I agree with both of them as regards the principles established by decided cases, upon which applications of this nature should be granted.

And I find that the Applicant has established triable issues as admitted by Counsel for the Respondent.  It accordingly follows that Applicant ought to be granted unconditional leave to appear and defend the suit and that contrary to the submissions of Counsel for the Respondent, granting the Applicant leave to defend the suit does not amount to an abuse of court process.  More so, when Respondent’s Counsel admits that triable issues have been established.

The prayer to make grant of leave conditional upon the Applicant depositing $48,000 is also not allowed as it is the contention of the Applicant that the Respondent received some money for the supply of goods, which goods were not supplied.

All these issues can only be properly and effectively determined after hearing the evidence of both parties.  The court cannot go into the merits of the issues raised at this stage and no injustice will be occasioned to any of the parties by hearing both of them.

The application is accordingly allowed for all those reasons.  The Applicant is granted unconditional leave to appear and defend the suit.  The defence to be filed within 10 days from the date of this ruling and served on Counsel for the Respondent.

Costs will abide the outcome of the main suit.

FLAVIA SENOGA ANGLIN

JUDGE

23.10.14