Court name
Commercial Court of Uganda
Judgment date
27 October 2008

Zamzam Noel & Ors v Post Bank Ltd (Miscellaneous Application-2008/530) [2008] UGCommC 74 (27 October 2008);

Cite this case
[2008] UGCommC 74


THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA TA KAMPALA
[COMMERIAL COURT]
MICS APPL 530/08
ZAMZAM NOEL & OTHER
S::::::::::::::::::::::::::::::::APPLICANTS
VERSUS
POST BANK LTD:::::::::::::
::::::::::::::::::::::::::::::RESPONDENT

BEFORE: HON LADY JUSTICE M.S ARACH-AMOKO
 


RULING

This is a Notice of Motion brought by Abdu Sozi the 3rd Applicant/Judgment Debtor, hereinafter referred to as “the applicant”,
Seeking orders from this court.
1)      
The order/decree in civil suit No.448 of 2008 be set aside.
2)       The applicant be granted unconditional leave to appear and defend the suit.
3)       The applicant be granted a stay of execution
4)       Costs of the application be provided for.

The application was brought under the provisions of Order 36 rule” and Order 52 rule 1 and 3 of the civil procedure rules.

The grounds are that:
a)      

The applicant filed an application for leave to appear and defend the suit out of time without leave of court on the advice but mistaken belief of his former lawyers that court vacation between 15-07-2008 and 15-08-2008 are excluded in the computation of time for filing any pleading.
b)       The applicant has a valid defence to the head suit.
c)       Execution of the decree is due for issue against the applicant that may lead to his imprisonment that shall occasion irreparable damage to his life.
d)       This application has been made within reasonable time.
e)       It is in the interest of justice that the status quo be preserved.
The brief history of this application is this
Post bank (Uganda) Ltd, the respondent, filed civil suit no 189 of 2008 against three people, namely:
1)      
Zam Zam Noel
2)       Hamid Sheila, and
3)       Abdu Ssozi, the applicant jointly and severally for breach of contract and for the recovery of shs 82,059,465 (eighty two million, fifty nine thousand, four hundred and sixty five shillings) together with interest and costs of the suit.
4)       The respondent filed the suit on the 23rd July 2008, by a specially endorsed plaint (summary procedure) under Order 36 rule 2 of the CPR. The claim was in respect of a business loan of shs 58 million (fifty eight million shillings) which the respondent advanced to the first and second defendants under a loan agreement dated 25th January 2006. The loan carried an interest of 25% p.a ; and it was to be repaid within 12 months. It was secured by a legal mortgage over plot No 774 Block No 11, Kabowa Road, in Kampala, the property of the applicant under a power of Attorney dated 12th December 2005, which he executed in favour of the first two defendants. The first and second defendants defaulted. The respondent’s efforts to sell the mortgage property were thwarted by one Sarah Namuleme Ssozi, said to be the applicant’s wife vide HCCS No 782 of 2006, where she obtained an interim injunction restraining the respondent from exercising its powers under loan agreement.

It appears, the said property was subject of an earlier sale to one Bagala Robert Ronald vide a sale agreement dated 4th April 2005. The respondent in the main suit alleged breach of agreement and fraudulent conduct; and averred that the defendants have no defence to the suit whatsoever.

Summons in the summary suit were issued on the 24th July, 2008, the day after filing the suit, giving the applicant ten (10) days from service thereof to apply for leave from this court to defend the suit or else the respondent would be entitled to obtain a decree for the amount claimed.

On the 1st September 2008, the respondent’s counsel applied for judgment on the ground that the applicant had defaulted in applying for leave to appear and defend the suit within the stipulated time, the application was based on the affidavit of service sworn on the 8th august 2008 by Richard Eyatu, a process server with M/S Gimara Advocates, the firm representing the respondent in the suit, to the effect that he had effected service on the applicant on the 26th July 2008 at his home at Kabowa. The applicant refused to sign the copy of the summons as requested.

The registrar declined to enter the judgment as requested, but noted on the applicant’s counsel’s letter requesting for judgment the following:
“Let this application for judgment wait till outcome of Misc Application no.448/2008”

Misc Application No.448/2008 was an application that had been filed by the applicant under order 36 r 3 and 4, for unconditional leave to be granted to him to appear and defend the main suit.

The Court stamp indicates that it was filed in this court on the 27th August 2008. At the commencement of hearing the said application, on the 26th September 2008, learned counsel for the respondent Mr. Isaac Bakayana raised a preliminary objection inter alia, that the said application was improperly before the Court. The applicant was served with summons on the 26th July 2008, but he had filed the said application on the 27th august 2008. This was one month after the expiry of the ten days within which he was to apply. I found and rules in favour of the respondent. As a consequence I dismissed the application, and entered judgment for the respondent in the sum claimed against the applicant and the other two defendants severally and jointly for the amount claimed together with interest and costs of the application and the application and the suit order O36 r 5. This is the judgment the applicant now seeks to set aside by the instant application.

Order 36 rule 11 of the CPR under which the application was brought states the following:
“After the decree the court may , if satisfied that the service was not effective or for any other good cause, which shall be recorded, set aside the decree and if necessary stay or set aside execution and may give leave to the defendant to appear to the summons and to defendant the suit , if it seems reasonable to the court so to do, and on such terms as the court thinks fit”

This rule gives court the discretion to set aside a decree entered against the applicant under Order 36 if the service was not effective or for any good cause.
Good’ cause is not defined.

In the application before me, it is clear the applicant based his application on good cause, and learned counsel for the applicant, Mr. Erick Muhwezi submitted very strongly that his client has a strong defence to the suit, which amounts to good cause for the purposes of Order 36 rule 11. His arguments were based on the affidavits sworn by the applicant in support of the application on the 27th August 2008 and a supplementary affidavit dated 18th September, 2008 in response to the affidavit in reply sworn on behalf of the Respondent by its Ag. Manager Credit, one dated 9th September, 2008.

The Supreme Court decision in the case of Frederick Zaabwe-Vs Orient Bank Ltd /and others-Ca No 4/06 was cited as authority for the contention that the applicant had a good defence to the suit.

The issue here is basically whether rule 11 applies in a situation where an application for leave to appear ad defend has been dismissed by the court inter parties. Mr Muhwezi argued that it does, because the application was brought under Order 36 and was dismissed and the judgment was entered under the same order.

According to Mr. Isaac Bakayana, learned counsel for the respondent on the other hand, O.36 r 11 only applies where the applicant never filed an application for leave to appear and defend a summary suit, but not where the application was filed but was rejected by court.

I am inclined to agree with the argument by Mr. Bakayana. This is because it is inconceivable that rule 11 was intended to allow a person where application for leave to appear and defend a summary suit was dismissed by court, to re-apply to the same court to set aside the decree and allow the same person to apply for leave to appear and defend to the same court. This is what the applicant is attempting to achieve by this application.

Rule 11 I clearly meant for an applicant who did not apply for leave to appear and defend a suit within the prescribed time and judgment in default of application for leave was entered against him as a result under O 36 rule 3 in the instant case like the instant one, where an application for leave to appear and defend was dismissed the only remedy is in my view an appeal against the dismissal order. Otherwise a person who has been served with summons in a summary suit and whose application was dismissed could simply re-apply for leave under rule 11 for any other ‘good cause’. In the case of Republic motors Ltd-Vs-Atlantic Decorators& General constructions [1982] HCB 104, Manyindo J as he then was held that: If a defendant wishes to appear and defend a summary suit he must obtain the leave of court and he must do so within 10 days of receiving the summons in summary suit. Time is of the essence. In that case, the application was made 3 days outside the prescribed time of ten days. It was therefore time barred. In the case before me, the applicant did not apply for leave to appear and defend, until after one month. His application was time barred and I dismissed it for that reason. Rule 11 does not therefore assist him as it would tantamount to obtaining the order for leave through the backdoor law.

This was clearly not the intention of rule 11 and the court cannot grant such an order.

The applicant of mistaken belief by his former lawyers that court vacation was excluded in the computation of time for filing pleadings was not canvassed by Mr Muhwezi, and wisely so, in my view wisely so, in my view.

This is because it would not amount to ‘good cause’ as provided for under rule 11.

Besides, there would be need to get the evidence of the said former lawyers to proved that mistaken belief , if at all it is true, which was not done in the case before me.

In the circumstances, and for the reasons given, I don’t think it is necessary to go into the merits of the applicant’s good defence. Those are arguments that would be entertained in an application for leave to appear and defend or to set aside a default judgment and decree entered under Order 36 rule 3. The judgment in this case was not a default judgment.

I accordingly find no merit in this application and dismiss it with costs to the respondent.

……………………………..
M.S Arach-Amoko
Judge
28/10/2008.

Ruling delivered in draft in the presence of:

1) Isaac Bakayana for Post Bank (U) Ltd.
2) Magambo Victor for Applicant holding brief for Mr. E. Muhwezi.
3) Okuni Court clerk.

Absent.
Parties.

…………………………………
M.S Arach-Amoko
Judge
28/10/2008