Court name
Commercial Court of Uganda
Case number
Miscellaneous Application 207 of 2010
Judgment date
1 December 2010

Micheal Nuwagira Toyota v Bhavesh.B.Kanabar (Miscellaneous Application 207 of 2010) [2010] UGCommC 29 (01 December 2010);

Cite this case
[2010] UGCommC 29

THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA HOLDEN AT KAMPALA
(COMMERCIAL DIVISION)
MISCELLANEOUS APPLICATION NO 207 OF 2010

MICHAEL NUWAGIRA TOYOTA ............................................APPLICANT
VERSUS
BHAVESH V.
KANABAR............................................................ RESPONDENT

Before Honourable Justice Christopher Madrama
RULING


The Applicant Michael Toyota brought this application under order 36 rule 3 (1) and (4) of the Civil Procedure Rules and section 33 Judicature Act for orders that:
1.      
That the applicant be granted unconditional leave to defend the main suit Civil Suit No. 100 of 2010 before this court
2.       That costs of the application be provided for, and
3.       Any other and further remedies as the court may deem fit to grant
The grounds of the application are that:
a.      
the applicant is not indebted to the Respondent in the sums alleged or at all
b.       That the Respondent was wrong to present the Applicants cheque for payment for the debt was already satisfied by mutual agreement between the parties.
c.       That the Applicant and the Respondent by mutual agreement, settled the matter in its entirety and finally by the Applicant giving to the Respondent his houses at Akright housing estate in full and final satisfaction of all and any claims by the Respondent, which offer the Respondent accepted.
d.       The Respondents claim against the applicant is without justification and tantamount to unjust enrichment.
e.       The Applicant has a good defence to the applicants claim with a real likelihood of success.
f.       That if the Applicant is not granted leave to defend the suit, he shall suffer gross financial loss and injustice.
g.       The real issue in contention between the parties, if any, should only be resolved in a suit inter partes.
h.       It is just and equitable to grant the Applicant leave to defend the suit.
The application is supported by the affidavit of Nuwagira Michael Toyota dated 6th of April 2010. The Respondent filed an affidavit in reply dated 28th of May 2010.
In an application for leave to appear and defend a suit brought by summary procedure the court acts on the principle that the defendant should show by affidavit that there is a bona fide triable issue. (See case of Souza Figuerido & Co Ltd v Moorings Hotel Co Ltd [1959] 1 EA 425 (CAK)). Does the Applicants affidavit raise bona fide triable issues which merit judicial consideration? In this case the Applicant admits that he owed the Respondent Uganda Shillings 230,000,000/-. Counsel for the Applicant further admitted that annexure E to the plaint is the agreement with respect to the said indebtedness. This is the agreement the Respondent relied on to file a summary suit against the applicant. The Applicant’s contention is that annexure E” on which the Respondent relied to file a summary suit had been varied. The facts of the said variation appear in the affidavit of the Applicant between paragraphs 4 11 which I will quote:

4.      
That while it is true and correct to that I engaged in a transaction with the Respondent, which fell through due to no fault on my part, I have since fully indemnified the Respondent in cash and kind and in full and final settlement of all his claims against me.
5.       That subsequent to the execution of the deed of acknowledgement and satisfaction of debt between myself and the Respondent and the writing of the cheque in his favour, I made a verbal offer to the Respondent of giving him my house situated at Akright housing estate on Entebbe Road in Kampala.
6.       That we travelled together to the site where the Respondent had the opportunity to view the houses and inspect the same.
7.       That we subsequently went to my office where he inspected the documents of title and was satisfied
8.       That the Respondent accepted the offer to the said house in full and final settlement of all and any monies owing from me to him.
9.       That the Respondent advised that he would like to transfer the house into the names of an Asian colleague of his or her at the time travelled to India and upon his return, would revert to me to complete the transfer of the house into the names of the said Asian.
10.      That I have waited for the Respondent to come and complete the transaction, but instead I was served on the 25th of March 2010 with a plaint in which the Respondent claims the sum of Uganda shillings 230,000,000/= from me.
11.      That I was further surprised to learn that the Respondent had presented the cheque for payment contrary to our agreement after he accepted to take the house in full satisfaction of his claims. ...

The self explanatory agreement between the Applicant and the Respondent referred to was made on the 18th day of July 2009 and is reproduced herein for ease of reference:
         "whereas
the debtor represented to the creditor that he was the owner of property comprised LRV 1565 folio 11, plots 32 and 34 Kutch, Road Jinja having purchased the same from Messrs Barclays Bank Ltd;
The Creditor based on the said representations entered into an agreement of sale and purchase of property dated 18th June 2009, whence a sum of Uganda shillings 400,000,000/- (Uganda Shillings Four Hundred Million Only) was duly remitted to the debtor's accounts and or his nominee.
The said sale and purchase having fallen through and or fail
ed due to the debtor's acts and or omissions, and the debtor reimbursed the creditor the sum of Uganda shillings 200,000,000/= (Uganda Shillings Two Hundred Million only) leaving an outstanding sum of Uganda shillings 200,000,000/= (Uganda Shillings two hundred million only) as due and owing to the creditor.
The debtor irrevocably acknowledges that
he is indebted to the creditor in the sum of UG.SHS: 200,000,000/= (Uganda shillings two hundred million only) with interest.
The debtor irrevocably commits and undertakes to settle the above-mentioned said entire debt of
UG. SHS 200,000,000/- (Uganda shillings two hundred million only) together with accrued interest of Uganda shillings 30,000,000/= (Uganda shillings thirty million only) against the security of Messrs DFCU bank Ltd cheque number 002235 in the amount of Uganda shillings 230,000,000 (Uganda shillings two hundred and thirty million only) for the above-mentioned debt upon the terms and conditions hereinafter appearing.
Now therefore this memorandum of acknowledgement and satisfaction of debt witnesses as follows: –

1.      
by executing the deed the debtor hereby irrevocably acknowledges his indebtedness to the creditor in the total sum of Uganda shillings 200,000,000 (Uganda shillings two hundred million only) together with the interest stipulated below.
2.       The mortgagor/borrower agrees to the further interest charge as follows:
a.      
if the debtor pays the entire amount of Uganda shillings 200,000,000/= (Uganda shillings two hundred million only) before or within 15 days then he shall pay interest of Uganda shillings 15,000,000 (Uganda shillings fifteen million only);
b.       if the debtor pays the amount of Uganda shillings 200,000,000 (two hundred million only) before or within 30 days then shall pay interest of Uganda shillings 20,000,000 (Uganda shillings twenty million);
c.       if the debtor pays the entire amount of Uganda shillings 200,000,000 (Uganda shillings two hundred million only) before or within 60 days then he shall pay interest of Uganda shillings 30,000,000 (Uganda shillings thirty million only);
d.       any part payment shall be considered as a failed payment of the outstanding sums and the interest payable shall be that which is due on payment of the date when the whole amount is paid.
e.       Should the debtor failed to pay the said sum or any part thereof within 60 days then the creditor shall be at liberty to seek recovery in a summary suit or any other lawful means.
f.       The debtor has deposited security of DFCU bank Ltd cheque number 002235 in the amount of Uganda shillings 230,000,000 (Uganda shillings 230 million only) to be called upon when the amount is due.
3.      
The mortgagor/borrower hereby undertakes to replace the said total sum of money by or within the stipulated time period.
4.       That the mortgage debt and interest hereby secured shall immediately become payable without any further or other demand as the preceding period hereunder shall have served as sufficient notice.
5.       The debtor acknowledges that the creditor shall not grant further extensions of the period within which to settle the indebtedness beyond the period prescribed above.
 
The payment referred to above had become due by the 20th of September 2009 being over 60 days from the 18th of July 2009. The cheque for the sum of Uganda shillings 230 million was presented to DFCU bank on 12 October 2009. On 14th October 2009 DFCU bank advised the customer that the cheque had been stopped. The summary plaint was filed in court on the 22nd of March 2010 and summons was issued on the same day. Affidavit of service was sworn by one Ogola Abdullah.
His affidavit shows that he served the defendant/applicant on the 26
th day of March 2010. This application was filed on the 6th of April 2010. Geoffrey Kavuma holding brief for Anne Tumwesigye appeared for the Applicant while Brian Kaggwa appeared for the Respondent.
Counsel Kavuma summarized the facts in the affidavit. The Applicant and Respondent agreed to purchase real estate in Jinja but the deal did not go through. This Property/ land is comprised in LRV 1565 Folio 11 situated at plots 32 and 34. There was a sale agreement annexure “A” to the plaint and the parties decided that the Applicant refund the monies paid by the Respondent for purchase of the Property. The outstanding to be paid by the Applicant under the new arrangement was Uganda shillings 230,000,000/=. Before this the Applicant had refunded Uganda shillings 310 million to the Respondent/Plaintiff. The original amount to be refunded to the Respondent was 540 million.
After the new agreement the applicant offered to give the Respondent his property situated at Kakungulu Akright Houses Entebbe Road in lieu of the 230 million Uganda Shillings. That after due diligence, the Respondent accepted the offer to take the house in lieu of payment. That the Respondent further stated that he wanted to transfer the house to another Asian colleague. The Applicant is still waiting for the final transaction. There was collateral provided by the applicant for the outstanding balance which the applicant issued. The Respondent attempted to cash the cheque without the knowledge of the applicant and reference was made to annexure “E” to the plaint and paragraph 2 (F) thereof which deals with the cheque issued. He submitted that the cheque was only to be presented when the amount became due.
Counsel submitted that the circumstances changed and trouble started when the Respondent attempted to cash the cheque. According to him the terms of the deed of acknowledgement changed when the Respondent accepted the offer of the property on Akright Estate in lieu of the sum of 230 million he owed the Respondent. Consequently the applicant submits that he is no longer indebted. The Applicant’s contention is that the outstanding claim by the Respondent of 230 million had been finally settled.
In the circumstances
counsel submitted that the Applicant is not indebted to the Respondent. The Applicant expected to reduce the subsequent agreement in writing. The Respondent should have communicated in writing about not wanting to go ahead with the deal. The applicant would then have made the necessary changes to fulfill his debt. The Applicant has a good defence to the suit. The suit is premature as all avenues had not been explored. All those avenues are still available. Should the leave not be granted, the Applicant would suffer loss. He prayed that the court allows the Application for leave to defend with costs.
Counsel Brian strongly opposed the application
and started by highlighting some facts for the court to consider namely:
The origin of the dispute was the execution of a sale agreement between the parties wherein the applicant misrepresented to the Respondent that he was the owner of property namely land LRV 1565 Folio 11 situated at plots 32 and 34 in Jinja. The sale agreement thereof is annexure “A” to the plaint. It turned out that the Applicant was not the owner of this property. The transaction was therefore a fraud on the Respondent. It was on the basis of the sale agreement annexure “A” that the Respondent paid UG SHS: 400,000,000/= out of a total of Uganda shillings 540,000,000/= leaving unpaid balance of UG SHS: 140,000,000/= towards the purchase of the said property. That the moneys paid for the purchase of the property was borrowed from Crane Bank and attracts a steep commercial interest rate.
Because it was established that the property did not belong to the Applicant the parties executed a deed of acknowledgement and satisfaction of debt on the 18th of July 2009. The Applicant then paid back 200,000,000/- Uganda shillings leaving a balance of 200,000,000 Uganda shillings which he irrevocably acknowledged as a debt in the said deed. The Applicant was given time to pay this money. Several options were provided for. If the Applicant refunded the money within 15 days from date of agreement he would pay UG SHS: 15,000,000/= as interest. In case it was refunded within 30 days Ug Shs 20,000,000/= would be the interest payable, Finally if the Applicant paid within 60 days, the interest thereon would be UG Shs: 30,000,000/=.
In addition the
Applicant deposited as security a DFCU cheque No. 002235 for Ug. Shs: 230,000,000/=. To be called upon when the amount fell due. The amount fell due 60 days from the date of the agreement. As it were the Applicant never made good his commitment to pay within the times stipulated and when the cheque was banked, it bounced with a note that there were no funds on account.
As far as law
is concerned Counsel for the Respondent submitted that the application was not supported by a summary of evidence as required by the rules of court. Secondly, there were material falsehoods in the affidavit in support of the application and application supported by material falsehoods is illegal. Counsel cited the case of BITAITANA –VS- KANAMIRA (1977) HCB 34. It is not in dispute that the summary plaint is for a sum that is due and admitted. Counsel for the Respondent pointed out that the facts as borne out in the affidavit in reply are in paragraph 5 thereof full of evasive denials and devoid of any substantiated defence in law or fact. That the assertions of the Applicant in the affidavit and submissions are not supported by documentary proof and therefore not credible evidence that the court should be believe. The averments therein demonstrate the Applicant’s dishonesty which is was the foundation or basis on which the subsequent deed of acknowledgement and satisfaction of debt was executed in the first place.
Counsel submitted that the Applicant admitted the claim and the effect of the admission is that judgment ought to be entered. He further submitted that the house/land is not worth the amount of money claimed and the house is not owned by him. Further, submitted that negotiations did not amount to any useful end. Consequently that it is not true as stated in paragraph 4 of the applicant’s affidavit that he has indemnified the Respondent. Counsel submitted that the application demonstrates the creativity of the Applicants mind and highlights his lack of good faith. The Respondent denies having travelled with the Applicant as averred in paragraphs 6 and 7 of the Applicants affidavit nor did he discuss with any conclusiveness whatsoever a deal related to the said House. The Respondent had not accepted the alleged house in full and final settlement of the debt. There is simply no proof. On the contrary, the Applicant executed an agreement acknowledging the amount in issue and undertaking to settle the same. That the applicant has been afforded amble time, within a period of close to two years to make good the indebtedness but no arrangement to pay even a single shilling has been made leaving the Respondent with no option but to seek a remedy in courts of law. As far as paragraph 11 of the Applicant’s affidavit is concerned, it is false for him to allege that he was surprised when the cheque was presented. The Applicant’s arguments are dishonest and amount to unjustified enrichment. He prayed that the application is dismissed with costs and judgment entered for the Respondent with interest and costs.
Counsel Kavuma in rejoinder contended that Counsel for the Respondent talked of fraud and misrepresentation; those are matters which require evidence and can only be handled at the trial of the main suit. Once there was offer and acceptance, it was a mutual agreement. The evidence can be presented. The indebtedness of the Applicant was paid by land.
I have reviewed the evidence and submissions of counsel. As far as the objection of the Respondent on the ground that the application does not contain a summary of facts and list of witnesses, documents and authorities is concerned, I disallowed this objection and the reasons thereof are that:
a.      
The trial of the application is by affidavit and the evidence to be adduced in the application is contained in the affidavit. The aim of order 6 rule 2 of the Civil Procedure Rules which requires every pleading to be accompanied by a list of witnesses, documents and summary of evidence serves inter alia to give notice of the evidence. The evidence was attached. The Respondent had replied to the affidavit in support. No prejudice had been occasioned or shown to have been suffered by the Respondent

b.      
Secondly as far as list of authorities is concerned, the relevant laws were quoted in the application itself serving as sufficient notice to the Respondent of the laws relied upon. Counsel for the Applicant did not quote any other authority and no prejudice had been occasioned to the Respondent for failure to attach a list of authorities.

c.      
Thirdly the Respondents objection is a preliminary in nature in that it attacks the competence of the application and ought to have been tried first. All in all no prejudice had been suffered by the Respondent and Counsel was asked to go to another point in his submission
On the point of whether the applicant lied on oath, I find that the applicant made certain assertions to the effect that he had indemnified the Respondent by giving him land in exchange for the 230,000,000/= he owed the Respondent. The case of BITAITANA –VS- KANAMIRA (1977) HCB 34 is not applicable. In this case Allen J held that:
 
1.       Inconsistencies in affidavits cannot be ignored however minor since a sworn Affidavit is not a document to be treated lightly. If it contains an obvious falsehood; then it naturally becomes suspect.
 
2.       An application supported by a false Affidavit is bound to fail because the Applicant in such a case does not go to Court with clean hands and to tell the truth.

It cannot be said that the alleged falsehood of the Respondent is obvious. I cannot at this stage say that it was a lie that the Applicant offered to give a house in lieu of paying the money he owed the Respondent or that the house did not belong to him. No documentary evidence has been adduced to prove whether the land belongs to the Applicant or not. Not evidence has been adduced as to who is in possession. The falsehood or truthfulness of the affidavit would be the crux of the triable issue if the court finds for the Applicant in this application. For this reason I cannot conclude whether the issue of the house being used for indemnification of the Respondent is a falsehood. For the above reasons the objection on the ground of falsehood of the Applicants affidavit is disallowed.
This application can be resolved simply on one point. The defence of the Applicant is that the parties varied the terms of the agreement upon which the claim in the plaint is founded. No documentary proof was provided or attached. In fact it is admitted that the alleged variation of the agreement was made orally. I do not need to decide whether there it is truth that there was such an oral variation of the agreement the foundation of the Respondents claim in the plaint. It is on record that the Respondent denies making an oral variation of the written agreement executed between the parties. In fact the Respondent presented the cheque used as security after the 60 days for repayment had lapsed. Whether there was an oral agreement however does not affect the decision of the court. The decision of the court is driven by the consideration of whether the alleged oral variation of the deed of acknowledgement and satisfaction of debt dated 28th July 2009 executed by the parties to this application, if true would be admissible. Oral variation of a written contract is generally excluded except in certain limited circumstances.
Sections 91 of the Evidence Act cap 6, deals with exclusion of oral evidence in proof of written agreements. Section 92 of the Evidence Act forbids the admission of oral evidence to vary the terms of a written contract. These sections are rules for the admissibility of evidence. Both sections are reproduced for ease of reference:
91. Evidence of terms of contracts, grants and other dispositions of property reduced to form of document.
When the terms of a contract or of a grant, or of any other disposition of property, have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence, except as mentioned in section 79, shall be given in proof of the terms of that contract, grant or other disposition of property, or of such matter except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained.
 
Section 91 forbids proof of a written document/contract through oral testimony. The document itself has to be produced for the inspection of court. The Applicant never attached any documentary proof of written documents averred in his affidavit. Though Counsel for the Applicant referred to documents attached to the pleadings, the facts of the written agreements of the parties were proved by an examination of the pleadings in the main suit from which the application arose.
Secondly section 92
of the Evidence Act excludes oral evidence to vary the terms of a written contract. It provides as follows:
92. When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to section 91, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to or subtracting from its terms; …”
 
Section 92 is about admission of evidence. No oral evidence is admissible to vary the terms of a written contract between the parties. “…no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to or subtracting from its terms;” In this case the Applicant’s application attempts to adduce oral evidence to vary the terms of annexure “E” to the plaint. This is inadmissible. Without much ado I find that the Applicant has not raised any triable issue by affidavit as what he attempted to raise is inadmissible evidence which cannot be proved even if leave to defend is granted. In other words leave to defend the suit will lead to no possible good as the ground of the defence is inadmissible in evidence.
Secondly, the Applicant admits that he owes Uganda shillings 230,000,000/= However his oral evidence even if admitted merely amounts to saying that he gave land in lieu of that amount. The Respondent denies this. The triable issue if the evidence was admissible would be whether the Respondent was fully paid by exchange of land or not. The Respondent affirmed an affidavit denying such a deal. In any case the so called deal does not affect the substance of the matter. Where a decree is extracted against the Applicant, Court Bailiffs in execution proceedings may attach the very same property allegedly given to the Respondent to swap the debt. The applicant in such a case would not be prejudiced except where:
•        
The house he states to have offered in exchange of his debt does not belong actually to him. If it turns out that the house does not belong to him, he would have suffered nothing though it would have been proved that the house deal was a sham. If the house is his and is attached, it would still not prejudice the Applicant because it would be sold to recover his debt to the Respondent.
•         Σεχονδλψ, if the property does belong to the applicant but is not of an equivalent or of more value than Uganda shillings 230,000,000/=, the Respondent would have got less value. The Respondent would be entitled to attach more property to satisfy the debt or try other modes of execution. However in the Applicants view the house would have completely satisfied the debt. Though his oral evidence is not admissible, less value should only adversely affect him and be grounded on his representation on the adequacy of the house to satisfy the debt.
•         Even if the Applicant was waiting for the Respondent to sign a document signifying his contract to take the house in lieu, the Applicant never had this intention reduced in writing. As the Respondent denies this arrangement then it is of no use to wait for the contract to be varied. The Respondent denies it and is unlikely to sign any written agreement. The Respondent came to court to enforce the written contract. The written agreement between the parties remains valid and can only be varied by another written document executed by the parties.
The final result is that the Applicants application is dismissed with costs.
Judgment is entered for the Respondent to this application
/the plaintiff in High Court Civil Suit NO. 100 of 2010 in the following terms:
1.      
The Respondent/plaintiff is awarded Uganda shillings 230,000,000/= being money owed to him by the Applicant pursuant to an agreement dated 18th of July 2009.
2.       Costs of High Court Civil suit No. 100 of 2010 are awarded to the Respondent/Plaintiff.

Signed

Christopher Madrama
Ruling delivered in the presence of:

Christopher Madrama
Judge
2nd December, 2010.