THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL COURT DIVISION)

MISCELLANEOUS APPLICATION. NO. 518 OF 2013

(Arising from Civil Suit No. 294 of 2013)

TURYAMUREEBA KEZEKIA MAFIGIRI }:::::::::::::::::::::::APPLICANT

VERSUS

1. JUSTUS RUGYEGYE                }
2. REM INVESTMENTS LTD}::::::::::::::::::::::::::::::::RESPONDENTS

BEFORE HON. LADY JUSTICE HELLEN OBURA

RULING

This application was brought under Order 36 rules 3 (1) & 4 and Order 52 rules 1 & 3 of the Civil Procedure Rules (CPR) as well as section 98 of the Civil Procedure Act (CPA) seeking for orders that the applicant be granted unconditional leave to appear and defendant the suit and that costs of the application be provided for.

The application is supported by an affidavit deposed by the applicant. The brief ground is that the applicant has a good and strong defense to the respondent’s suit which raises triable issues and as such it is just and equitable that the application be granted.

The respondents filed an affidavit in reply to the application deposed by Mr. Justus Rugyengye, the 1^st respondent who is also the managing director of the 2^nd respondent. He deposed, inter-alia, that the application raised no plausible issues/defence to the suit.

At the hearing of the application, Mr. Wame Pearson appeared for the applicant while Mr. Gerald Nuwagira appeared for the respondents. In his submissions, Mr. Wame argued that there are three triable issues in the matter, namely;

1. Whether the plaint is a nullity due to a misjoinder of causes of action.
2. Whether the plaint which was never specifically signed by any of the respondents/ plaintiffs nor their recognized agents can be acted upon by court?
3. Whether the applicant is indebted to the respondents/plaintiffs as claimed?

With regard to the first triable issue, it was submitted for the applicant that the plaint is a nullity for there is a misjoinder of causes of action. The applicant’s counsel argued that annexture “A” to the plaint dated 23/10/2009 is in respect of the 1^st respondent while annextures “B” – “N” are in respect of the 2^nd respondent. He contended that the two causes of action cannot be joined because they never arose out of the same series of transactions.

The applicant’s counsel relied on the case of Barclays Bank DCO vs C. D Patel and others [1959] 1 EA 214 (HCU) and Yowana Kahere vs Lunyo Estates Ltd [1959] 1 EA 319 for the principle that the causes of action which arose independently and do not show any common question of law cannot be joined together and such plaints cannot be saved under Order 1 rule 9 of the CPR.

Mr. Wame also argued that the plaint was signed by counsel for the plaintiff but it is not known which plaintiff is being referred to. He relied on the case of Green Watch and Another vs Golf Course Holdings Ltd Misc. Application no. 390 of 2001 at pg 57 and contended that there is no plaint properly before this court to give the respondents right of audience.

Lastly, as to whether the applicant is indebted to the  respondents/plaintiffs as claimed, Mr. Wame contended that in the affidavit in support, the applicant stated the money he borrowed and that he had paid it. In Mr. Wame’s view the application raised triable issues of law and of fact.

In reply to the above submissions, Mr. Nuwagira argued that Order 1 rule 1 refer to the same transaction or series of transactions and submitted that the cause of action arose from the series of transactions between the applicant and the respondents. He further argued that Order 1 rule 9 which is mandatory with no exception is clear to the effect that no suit shall be defeated by reason of mis joinder or non joinder of parties. He relied on the case of Allied Bank International Ltd vs Sadru Kara Abdul Kara Civil Suit no. 191 of 2002 and Buffalo Tungsten vs S.T.S (U) Ltd MA 6 of 2012 where this court relied on the case of Mohan Musisi Kiwanuka vs Asha Chand SCCA No. 14 of 2002 and held that it is a cardinal principle of law that court must avoid multiplicity of suits. 

Counsel then proceeded to distinguish the cases of Yowana Kahere and others v Lunyo Estates Limited [1959] 1 EA 319 (HCU) and Barclays Bank DCO v C B Patel and others [1959] 1 EA 214 (HCU) from the instant one. He argued that the facts and circumstances of those cases are different as in the former the cause of action did not arise from the same series of transactions while in the latter there were two different guarantors with two distinct transactions unlike the current one where both causes of action arose from a series of transactions between the applicant and the respondents.

On the allegation that the plaint is improper because it was neither signed by the plaintiffs nor their recognized agent, Mr. Nuwagira explained that he had already indicated that he represents both plaintiffs. He therefore argued that those errors are curable under Article 126 (2) (e) of the Constitution.

On the alleged payment of the money borrowed, counsel for the respondents argued that the notice of motion did not state any grounds relied on apart from the technicalities stated in the affidavit and submitted that the application is incompetent. He contended that in paragraph 3 of the affidavit in support the applicant stated that he paid the money between October 2008 and April 2011 and yet the money was borrowed in October 2009.  He pointed out that annexture “TKM1” to the affidavit in support does not state the date the money was paid.  He argued that assuming the transactions highlighted on the annextures are the alleged payments, then the 1^st payment of 31^st October 2008 would have been made a year before the money was lent. It was pointed out that the total amount paid by the applicant on 30^th October 2009 (Shs.42, 000,000/=) and on 6^th January 2010 (Shs. 68,000,000/=) as per the statement (TKM1) is Shs. 110,000,000/= which when added to the Shs. 25,000,000/= and Shs. 10,000,000/= attached to the affidavit in support as annextures TKM 2 & TKM3 respectively gives a total sum of Ug. Shs 145,000,000/= acknowledged in the plaint.

Counsel for the respondent further argued that the applicant has not denied the agreements and the requisition forms attached to the plaint by way of rejoinder and so his general denial of liability without any explanation should be rejected. He relied on the case of Kisawuzi Henry vs Moses Kayondo Misc. Application No. 45 of 2011 for the conditions for grant of an application like this one.

I have given due consideration to the grounds of this application, the supporting affidavit and its attachments as well as the affidavit in reply. I have also perused the plaint in summary suit with its annextures particularly the Finance Agreement and the Requisition Forms as well as considered the arguments for and against this application based on the affidavits of both parties.

By way of background to this application, it is the respondents’ case that they extended to the applicant a friendly facility of Ug. Shs. 230,200,000/= by virtue of a Finance Agreement executed on the 23^rd day of October 2009. They allege that to date the applicant has paid Ug. Shs. 145,000,000/= leaving a balance of Ug. Shs. 84,600,000/=. It is also the respondents’ case that subsequent to that the applicant requested for and received additional Ug. Shs. 20,856,000/= from the 1^st respondent and Ug. Shs. 29,260,000/= from the 2^nd respondent which he has not paid back. The respondents instituted a summary suit seeking to recover Ug. Shs. 134,716,000/= from the applicant. In his pleadings, the applicant admitted to borrowing Ug. Shs. 200,000,000/= only from the 1^st respondent in October 2009. The applicant claims that he paid back the entire sum of money plus interest of Ug. Shs. 60,000,000/= but denies borrowing any other money after that.

In the case of Kisawuzi Henry vs Moses Kayondo(supra) the court relied on the case of Maluku Interglobal Trade Agency vs Bank of Uganda [1985] HCB 65 for the criteria to be considered before leave is granted to defend a suit under Order 36 of the CPR. It was held that before leave to appear and defendant is granted the defendant must show by affidavit or otherwise that there is a bona fide triable issue of fact or law. Where there is a bona fide triable issue of fact or law, 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 defence must be stated with sufficient particularity to appear genuine and general or vague statements denying liability will not suffice.

It is therefore the duty of this court to examine the defendant’s affidavit to determine whether there is an issue or question in dispute that needs to be tried. This court is also obliged to examine if the facts alleged by the applicant amount to a plausible defence.

The applicant has raised what in his view are the three triable issues two of which are points of law on the validity of the plaint. The first alleged triable issue is that there has been a misjoinder of causes of action in the plaint which counsel for the respondent has denied. In determining whether this is a bona fide triable issue, I have considered the provisions of the CPR relied upon by both counsel to support their respective arguments. Order 1 rule 1 of the CPR provides:

“All persons may be joined in one suit as plaintiffs in whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if those persons brought separate suits, any common question of law or fact would arise.”

In Barclays Bank DCO vs C B Patel and others [1959] 1 EA 214 (HCU)  it was held that for causes of action to be joined in one action there must be a right to relief arising out of the same transaction or series of transactions and a common question of law or fact. It was however found in that case that distinct causes of action accrued on different dates and against different defendants and the circumstances in which the liability of different guarantors arose were separate and distinct; accordingly, the two causes of action could not be disposed of together.

In this case, we need to determine whether the reliefs sought by the 1^st and 2^nd respondents arise out of the same transaction or series of transactions and whether there is a common question of law or fact.  According to the facts presented by the respondents, the applicant first borrowed money from the 1^st respondent and used a land title as security. It is alleged that he later borrowed more money from the 1^st respondent and the 2^nd respondent, an incorporated body whose managing director is the 1^st respondent.  Counsel for the applicant contended that the mere fact that the 1^st respondent is the managing director of the 2^nd respondent is not adequate ground for joining the causes of action since the 2^nd respondent is a separate legal personality from the 1^st respondent.

According to Cambridge International Dictionary of English 1^st Edition, series means “a number of similar or related events or things, one following another.” In the instant case annextures to the plaint in support of the additional borrowings from the 1^st and 2^nd respondents which have not been disputed by the applicant show that there were series of transactions from 27^th October 2009 to 9^th September 2010.  There are two incidents when the applicant signed for sums of money from the 1^st and 2^nd plaintiff/respondents on the same day. Others transactions were also done within the same period. He was therefore borrowing from the two respondents concurrently. In my view that amounts to series of transactions in respect of which the 1^st and 2^nd respondent’s claim could be safely joined and determined in one suit as they both raise a common question of law and fact. 

In coming to the above conclusion, I was also fortified by the decision in HL Bolton (Engineering) Ltd v TJ Graham & Sons Ltd [1957] 1 QB 159 where Lord Denning likened the company to a human body and drew a distinction between “mere servants and agents” and what he called the company’s “directing mind”. He stated thus:

“A company . . . has a brain and nerve centre which controls what it does. It also has hands which hold the tools and act in accordance with directions from the centre. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind and will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such.”

This dictum was applied by the House of Lords in the case of Tesco Supermarkets Ltd v Nattrass [1972] AC 153 where it was held that normally only the board of directors, the managing director and perhaps other superior officers carry out management functions and speak and act as the company.

In the instant case, much as the 2^nd respondent company is a distinct legal personality, the 1^st respondent as its managing director represents its directing mind and will and controls what it does. In both transactions he was the one acting for himself and for the company. He would therefore be the right person to instruct lawyers to file a suit in respect of both claims and be a key witness in proving them.  This makes the transactions related and I do not find any illegality and or irregularity with the plaintiffs jointly pursuing their respective claims in one suit under Order 1 r 1 of the CPR so as to avoid multiplicity of proceedings. It is therefore my considered view that there is no misjoinder of causes of action in the plaint as alleged and I so find. This finding clearly shows that the 1^st alleged triable issue is not sustainable and as such cannot be a ground for granting leave to appear and defend the main suit.

The 2^nd alleged triable issue raised in this application is that the plaint was not signed by any of the parties and/or their recognized agent. While is true that the plaint was signed by “counsel for the plaintiff” in a singular form instead of plaintiffs, I do not agree that it is not known which plaintiff it was signed for. Paragraph one of the plaint in summary suit states:

“The Plaintiff is an adult male Ugandan of sound mind whose address for purpose of this suit is c/o M/s Byarugaba & Co. Advocates…”

The 2^nd paragraph then described the 2^nd plaintiff as a limited liability money lending company managed by the 1^st plaintiff. To my understanding the 1^st paragraph was describing the 1^st plaintiff since there are only two plaintiffs; one adult male Ugandan and the other a limited liability company. I therefore want to believe that even when counsel signed for the plaintiff he probably meant counsel for the 1^st plaintiff who was referred to as the plaintiff in paragraph one of the plaint. The argument about failure to sign the plaint in my view would therefore only affect the 2^nd plaintiff.

Be that as it may, I have looked at the affidavit in support of the plaint in summary suit deposed by the 1^st plaintiff and it is clearly stated in paragraph 5 thereof that the plaint is filed on behalf of the 1^st plaintiff and the 2^nd plaintiff. I do not therefore have any doubt in my mind that when counsel signed the plaint he was doing so on behalf of both parties since instructions to file the suit was given by the 1^st respondent who is also the managing director of the 2^nd defendant. I would therefore treat the reference to the “plaintiff” instead of “plaintiffs” as a minor error by counsel which should not be visited upon the respondents who gave proper instructions as confirmed by the affidavit in support of the plaint. In any event, the error can be overlooked in the interest of ensuring that substantive justice is done in accordance with Article 126 (2) (e) of the Constitution.

This case is clearly distinguishable from that of Green Watch and Another vs Golf Course Holdings Ltd Misc. Application No. 390 of 2001 relied upon by counsel for the applicant to support his argument because unlike in that case,  counsel who signed the plaint in the instant case had instructions to represent both parties as indicated above.

In the premises, I find that the alleged 2^nd triable issue is a mere technicality which cannot be canvassed at the trail and for that reason this court is unable to grant an unconditional leave to appear and defend the suit on that basis.

Finally, the 3^rd alleged triable issue is that the applicant is not indebted to the respondents. The applicant stated in paragraphs 3.1 & 3.2 of the affidavit in support of this application that on or about October 2009 he borrowed a sum of Shs. 200,000,000/= from the 1^st respondent which he fully paid back plus interest of Shs. 60,000,000/=. He relied on annextures TKM1, TKM 2 and TKM3 as proof of payment. He also denied the subsequent amounts allegedly extended to him. On his part counsel for the respondents has argued that the denial by the applicant is general and lacks explanation.

TKM1 is the bank statement of T.K Engineering Ltd which the applicant relied on to show the amounts he paid through bank transfers. It is a bank statement from Kenya Commercial Bank for a period between 27/08/2008 and 30/04/2010. In the affidavit in reply the 1st respondent challenged this document in paragraphs 4 and 5.The document shows movement of money to and from the account but it does not show who was paid so it is inadequate evidence to determine proof of payment. To begin with there is a highlight on 31/10/2008 showing money that was drawn out of the account amounting to Ug. Shs 47,000,000/=. There is another highlight on 24^th June 2009 for money transferred to Stanbic Bank amounting to Ug. Shs. 95,000,000/=. This alleged payments could not have been intended to clear off the debt since the applicant in paragraph 3.1 of his affidavit in support stated that he borrowed the Shs. 200,000,000/= on or about October 2009. In addition, annexture A to the plaint indicates that the Shs. 230,200,000/= was extended to the applicant on 23^rd October 2009.

The earliest highlight is on 31/10/2008, one year before the loan was taken from the first respondent.  The next alleged fund transfer was 24/06/2009 four months before the loan was taken. Therefore the above payments could not have been made prior to the provision of the loan facility. The remaining two debits made after the loans were disbursed were not denied by the respondents. In fact their counsel submitted that it is part of the Shs. 145,000,000/= stated in the plaint to have been paid. I must however observe that annexture TKM1 which generally shows only debits without indicating the beneficiary does not provide adequate proof of payment to extinguish the loan sum of Ug Shs. 230,200,000/= or even the Shs. 200,000,0000/= the applicant acknowledged as lent to him.

TKM2 is a receipt of payment of debt to Mr. J. Rugyengye received by Sheila Mutatina and TKM3 which is a petty cash voucher for repayment of a loan to Justus Rugyengye. These receipts were acknowledged by the 1^st respondent in paragraph 6 of the affidavit in reply so there is no doubt that they were issued after payment of the sums stated therein. In paragraph 3.3 of the affidavit in support the applicant further denied any knowledge of any debt to the 2^nd respondent and did not offer an explanation for the documents from the 2^nd respondent. The paragraph states;

“THAT I have never borrowed any money from the 2^nd respondent at all material time and by reason here of I have no knowledge or information  sufficient to form a belief as to any allegation in the said plaint save to contents of paragraph  3.1 and 3.2 herein before  specifically admitted”.

I find this to be untrue because annextures “B” – “A19” to the plaint are loan requisition forms which indicate that Mafigiri Kezikia requested for and received certain sums of money between October 2009 and September 2010. His signature is also appended to each of those annextures. No denial has been made of those signatures or any explanations furnished as to the circumstances under which he signed those requisitions. The applicant has simply made a general denial of the sums allegedly lent to him without rebutting the evidence on record by either producing proof of full payment or disputing the validity and/ or authenticity of the documents that bear his signature which were produced in proof of the claim. In the absence of evidence in rebuttal of the claim this court is inclined to believe the respondents case that the applicant was lent the sums of money stated in those annextures which he has not fully paid back and he has no defence to the claim.

I must however point out at this juncture that the total sum of annextures D, G, J, L, O,P, S, X, A1, A10 and A13 to the plaint is Shs. 20,760,000/= and not Shs. 20,856,000/= as claimed in the plaint. Similarly, the total sum of annextures B, C, E, F, H, I, K, M, N, Q, R, T, U, V, W, Y, Z, A2, A3, A4, A5, A6, A7, A8, A9, A11, A12, A14, A15, A16, A18 & A19 is Shs. 29,160,000/= as opposed to the Shs. 29,260,000/= claimed in the plaint.

The applicant has not shown any bona fide triable issue of fact or law that justifies granting him an unconditional leave to appear and defend the main suit.  In the result, leave to appear and defend the suit is denied and judgment is entered for the respondents in the sum of Ug. Shs. 134,520,000/= which is arrived at after deducting a sum of Ug. Shs.196,000/= that has not been supported by documentary evidence from Ug. Shs 134,716,000/= claimed in the plaint. Costs are awarded to the respondent.

I so order.

Dated this 16^th day of May 2014.

Hellen Obura

JUDGE

Ruling delivered in chambers at 4.00pm in the presence of Mr. Gerald Nuwagira for the respondents. The applicant and his counsel were absent.

JUDGE

16/05/14