THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA

AT KAMPALA

(COMMERCIAL DIVISION)

MISC. APPLICATION NO.98 OF 2014

(ARISING FROM CIVIL SUIT NO. 59 OF 2014

DOUGLAS DUNCAN MULONDO TEBUSEKE-------APPLICANT/

                                                                 DEFENDANT

VS

M/S ATELAL HOLDINGS LIMITED ……….……RESPONDENTS/
                                                                            PLAINTIFFS

BEFORE: LADY JUSTICE FLAVIA SENOGA ANGLIN

RULING

By this application, the Applicant sought to be granted unconditional leave to appear and defend the summary suit.  The grounds for the application are that he has a good and valid defence to the claim.

Costs of the application were also applied for.

The application was supported by the affidavit of the Applicant and the grounds were also set out briefly in the notice of motion.

At the hearing, counsel for the Applicant Adopted paragraphs 1-8 of the supporting affidavit in total, plus all the paragraphs of the affidavit in rejoinder.

He then submitted that it was clear from both affidavits that there are triable issues of law which could dispose of the whole suit.  He cited Rules 2 and 4(2) of the Judicature Act (Mediation Rules) 2013, in support.

The issues were formulated as follows:

1. Whether the sale of property to the 3^rd party discharged the liability of the Applicant.
2. Whether after sale of the property in question, the Respondent is still entitled to claim the money from the Applicant.
3. Whether it was lawful for the Respondent to lend money inclusive of interest without a valid Money Lenders License as required by S.2 (1) of the Money Lenders Act.
4. Whether the certificates annexed to the Respondent’s affidavit in reply Annexture “A” – that are contrary to sections 129, 119 and 196 of the Registration of Titles Act were lawful and legalized the loan.
5. Whether sale of the property without order of foreclosure was valid in law.
6. Whether the Respondent is entitled to lend money at that rate of interest contrary to S. 7 of the Money Lenders Act.

It was Counsels assertion that, in view of those issues, it was only just and equitable that application be allowed and Applicant permitted to file a defence within a period specified by court.

Referring to the affidavit in support and the one in rejoinder and relying on the affidavit in reply of Faraj Khalifa, Counsel for the Respondent strongly opposed the application.

Citing the loan agreement upon which the money in issue was advanced, Counsel submitted that the money remains unpaid to date although Applicant admits having taken it.

Adding that since the terms of the agreement are clear, leave can only be granted under 0.36 C.P.R. if the Applicant has a plausible defence; and that the Applicant had failed to establish such a defence in the present case.

The case of Maluku International Interglobal Trading Agencies Vs Bank of Uganda [1985] HCB 65 SCU was relied upon for the holding that “an intending Defendant should show defence in a proposed written statement of defence”.

Counsel argued that no such defence had been attached in this case and therefore the application should fail.  He pointed out that the same decision was reached in the case of Begumisha George Vs EADB Misc. Appli. 451 /10 and judgment was entered against the Applicant.

Court was urged to follow the decisions and come to the same conclusion.

Commenting about the triable issues counsel stated that none had been raised as the Respondent was not part of the sale agreement. Further that the provisions of the Money Lenders Act do not apply to the transaction in issue.  And that the mortgage in issue is an equitable mortgage.

The case of Kasifa Namusisi and 2 Others Vs Francis M.K. Ntabaazi regarding issue of Money Lenders Act was cited in support and Counsel then prayed that the application be disallowed.

It was also contended that the application was scandalous and embarrassing and should be struck out under 0.6 Rule 18 C.P.R. Adding that the pleadings at the Land Division were not concerned with the present suit and should be disregarded.  But that if leave is to be granted it should be conditional under 0.36 RR. 8 and 10 C.P.R.

In rejoinder, counsel for the Applicant reiterated his earlier submissions and insisted that leave to defend should be unconditional.

I have given the submissions of both Counsel the best consideration I can in the circumstances and taken into account the affidavits for and against the application and the cases cited in support. 

 Decided cases have established that “at this stage the applicant is not bound to show and convince court that there is a good defence on the merits of the case and the court is not required to inquire into the merits or demerits of the Applicant’s defence to the suit”. However, it is incumbent upon the court “to study the grounds raised and ascertain whether they raise triable issues and are not sham.  Court must be satisfied that if the facts alleged by the applicant are established, there would be a plausible defence”. – See the case of Stella Banya Vs Haji Abdu Migadde Misc. Appl. 441/2000, from C.S. 329/2006; where Justice Remmy Kasule relied upon the case of Abubaker Kato Kasule Vs Tomson Muhwezi [1992 – 93] HCB 212.

Bearing in mind the above principles and applying them to the circumstances of the present case; I find that the Applicant has raised triable issues that can only be properly and effectively determined if he is granted leave to file a defence.

Contrary to the submissions of Counsel for the Respondent, the Applicant did attach a proposed defence to the application, thereby enabling court to determine that the arguments put forward raise triable issues.  I therefore find that the principles set out in the decided cases for grant of leave to file a defence were fulfilled.  The case of Begumisa George VS EADB (Supra) is accordingly not applicable to the circumstances of the present case.

The rest of the arguments of Counsel for Respondent regarding the terms of the loan agreement, the sale agreement and the mortgage can only be effectively determined when both parties are heard; as the Applicant also claims that he has discharged his obligations.  At this stage, the court is not required to go into the merits of the case.

It is also asserted that there is another case pending before the Land Division raising similar issues as the present case.

The Applicant also raises issues of illegality and fraud with regard to the essence of the Respondents claim, which appear genuine.

Court accordingly finds that the Applicant has established a plausible defence and it is only just and equitable that he be granted unconditional leave to file his defence.

The application is allowed for all the reasons set out herein.  The Applicant is directed to file his defence within 15 days from today.  Costs will abide the outcome of the main suit.

FLAVIA SENOGA ANGLIN

JUDGE  09.04.14