THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL COURT DIVISION)

MISCELLANEOUS APPLICATION NO. 432 OF 2013

(Arising from Civil Suit No. 148 of 2013)

MAKERERE UNIVERSITY::::::::::::::::::::::::::::::::::::::::APPLICANT

VERSUS

ZESCOM TECHNOLOGIES LIMITED::::::::::::::::::::::RESPONDENT

 BEFORE HON. LADY JUSTICE HELLEN OBURA

RULING

This application was brought under Order 9 rule 12 of the Civil Procedure Rules (CPR) and Section 98 of the Civil Procedure Act (CPA) seeking for orders that:

1. The ex parte judgment and decree entered against the applicant in H.C.C.S No. 148 of 2013 Zescom Technologies Limited vs. Makerere University be set aside.
2. The applicant be allowed to file its written statement of defence out of time/the time allowed for filing the applicant’s written statement of defence be enlarged.
3. An order for stay of execution and or enforcement of ex parte judgment and decree issued be granted
4. Costs of the application be provided for.

The grounds of this application are contained in the notice of motion and affidavit in support of the application deposed by Mr. David Kahundha Muhwezi, the applicant’s University Secretary. The first ground is that the summons to file a defence in the said suit was not properly served on the applicant and the applicant was prevented by sufficient cause from filing a written statement of defence. Secondly, that the judgment and decree were illegally and fraudulently obtained. Thirdly, that the applicant has a good and plausible defence to the suit as the applicant is not indebted to the respondent having fully settled it. Fourthly, that the application has been filed without delay and lastly, that it is in the interest of justice that the said judgment and decree be set aside and the applicant be given an opportunity to be heard in the main suit and the time within which to file a defence be enlarged.

The respondent did not file an affidavit in reply. When this application came up for hearing on 4^th November 2013, Mr. John Fisher Kanyemibwa represented the applicant while Mr. David Kaggwa represented the respondent. The matter could not proceed because counsel for the applicant informed court that he had not yet served the respondent with the application. It was then adjourned to 28^th November 2013 but on that date when the matter was called on for hearing the respondent and its counsel were not present. Mr. Kanyemibwa informed court that the respondent’s counsel had a sick child but they had agreed to file written submissions. Court then allowed them to do so and gave the time schedule. However, as at the time of preparing this ruling no submissions had been filed by the respondent’s counsel. In effect this application is not opposed and therefore I would have been inclined to grant it even without looking at its merits. Be that as it may, I have considered the applicant’s written submissions and determined it on merits so as to avoid any doubts.

Counsel for the applicant referred to paragraphs 15 and 16 of the affidavit in support and submitted that the applicant’s University Secretary who is authorized by law to receive service of court process on behalf of the applicant was not personally served with the summons to file a defence.

It was also submitted for the applicant based on the case of Masaka Farmers & Producers Limited vs Aloysius Tamale & Anor [1992-93] HCB 203 that the evidence on record demonstrates that the applicant has a good and plausible defence to the respondent’s claim. Counsel argued that at the time the exparte judgment against the applicant was entered on 20^th May 2013, the contract price of Ug. Shs. 22,000,000/= had been fully settled by the applicant.

In addition to that it was contended for the applicant that from the face of the respondent’s pleadings the ex parte judgment was erroneously entered against the applicant. Counsel argued that it was untenable that the respondent could have suffered alleged loss of profit equivalent to Ug Shs. 28,750,000/= for the period between December 2012 when the metal detectors were supplied until April 2013 when the contract sum was paid. He contended that the claim ought to have been subjected to formal proof as required by law before the same was awarded to the respondent under the ex parte judgment. Similarly, it was argued for the applicant that the claim of interest amounting to over Ug. Shs. 5,000,000/= ought to have been subjected to formal proof in the absence of any agreement between the applicant and the respondent for the payment of interest on the contract price and the applicable rate of interest.

I have carefully considered the application, its supporting affidavit together with the attachments thereto.   I have also given due consideration to the arguments made by the applicant’s counsel and the authority cited. The respondent by not filing an affidavit in reply is deemed to have admitted the statements of fact contained in the affidavit in support of this application and so the application stands unchallenged as was held in Makerere University vs St. Mark Education Institute Ltd & Ors [1994] KALR 681, where Lugayizi J, followed the principle in Samwiri Masa vs Rose Achieng [1978] HCB 297 and stated:

“In an application proceeding by evidence supplied by affidavit, where there is no opposing affidavit, the application stands unchallenged.”

On the question whether there are sufficient grounds for setting aside the ex parte judgment and decree obtained by the respondent in H.C.C.S No. 148 of 2013, it is now settled that Order 9 rule 12 of the CPR under which this application was brought, grants the High Court unfettered discretion to set aside or vary ex parte judgment. See Mbogo and Another vs Shah [1968] EA 93 (CA), Nicholas Roussos v GulamHussein Habib Virani and Another SCCA No 9 of 1993, Attorney General & Another v James Mark Kamoga & Another SCCA No. 8 of 2004.

Ssekandi Ag. J (as he then was) in the case Henry Kawalya vs J. Kinyakwanzi [1975] HCB 372 stated the rationale for court’s unfettered discretion in such cases as follows:

“An exparte judgment obtained by default of defence is by its nature not a judgment on merit and is only entered because the party concerned failed to comply with certain requirement of the law. The court has power to dissolve such judgment which is not pronounced on the merits or by consent but entered specifically on failure to follow procedural requirement of the law.”

The Court of Appeal for East Africa in Mbogo vs Shah (Supra), and in Patel v. E.A. Cargo Handling Services (1974) E.A. as per Duffus P. at page 76 stated as follows:

“……The main concern of the court is to do justice to the parties and the court will not impose conditions on itself to fetter the wide discretion given to it by the rules.”

In the instant case, this court is obliged to exercise that discretion judicially in light of its facts, circumstances and merits. The main ground of this application is that summons to file a defence in the said suit was not properly served on the applicant. This is based on the fact that the University Secretary who is authorized by law to receive service of court process on behalf of the applicant was not personally served. I agree with counsel for the applicant that in such a scenario service of the summons was not effective. The courts have defined effective service to mean service having the intended or desired effect, which is to make the defendant aware of the suit and respond to it. See: David Ssesanga vs Greenland Bank Ltd (in liquidation) (Supra); Geoffrey Gatete and Angela Nakigonya vs William Kyobe SC. Civil Appeal No. 7 of 2005.

In the instant case the applicant was never made aware of the suit because the respondent opted to serve an unauthorized person and so the desired effect which would have been to file the necessary pleadings to defend the suit was not achieved. The summons was merely stamped with the applicant’s stamp but there was no signature of an authorized person acknowledging receipt thereof. For that reason, I am satisfied that the purported service on the applicant was not effective and I would be inclined to set aside the ex parte judgment and decree on that ground alone.

But turning to whether the applicant has a strong defence on the merits, in the case of Masaka Farmers & Producers Limited vs Aloysius Tamale & Anor (supra) it was held that an applicant successfully applying to set aside an ex parte judgment under Order 9 rule 12 of the CPR has to demonstrate that he has a prima facie defence to the respondent’s claim. It is the applicants’ case that they are not indebted to the respondent in the sum claimed as the outstanding contract price had been paid by the applicant by the time the ex parte judgment was entered. Annexture MU4 is a decree dated 18^th April 2013 that was issued after the ex parte judgment was entered. Prior to the date the ex parte judgment was entered, the respondent had issued to the applicant an invoice dated 5^th December 2012 in the sum of Ug. Shs. 22,420,000/=. That invoice is annexture MU1 to the affidavit in support of the application. It is the applicant’s contention that that invoice was settled and a receipt for a sum of USD 8,201was issued to the applicant on 26^th April 2013. This receipt is annexture MU2 to the affidavit in support of the application and the mode of payment was by cheque.

I do not agree with the applicant that judgment was entered after the payment had been made on 26^th April 2013 because the decree bears a date of 18^th April 2013. Nonetheless, the uncontroverted evidence on record shows that the applicant paid the sum that was due at the time of filing the suit eight days after the ex parte judgment had been entered. I am therefore inclined to agree with the applicant that it is not indebted to the respondent. Since the respondent has produced any evidence to contradict this position, I find that the applicant has a strong defence of having settled the respondent’s claim.

Following the above findings, I am of the firm view that the justice of this case demands that the ex parte judgment and the decree entered in Civil Suit No. 148 of 2013 be set aside and so be it. Consequently, execution of the decree is stayed and the applicant/defendant is allowed to file its written statement of defence within fifteen days from the date of this ruling. For the reason that the respondent was adamant in conceding to the application well knowing that it would not file an affidavit in reply and submissions in opposition to it, costs of this application is awarded to the applicant.

I so order.

Dated this 28^th day of February 2014.

Hellen Obura

JUDGE

Ruling delivered in chambers at 10.20 am in the presence of Mr. Pope Ahimbisibwe holding brief for Mr. John Fisher Kanyemibwa for the applicant and Mr. Sam Ogwang holding brief for Mr. David Kaggwa for the respondent.

JUDGE

28/02/14