Court name
Commercial Court of Uganda
Judgment date
19 April 2011

Greenland Forex Bureau (K) Ltd Greenland Bank Ltd (In Liquidation) (Miscellaneous Application-2001/147) [2011] UGCommC 75 (19 April 2011);

Cite this case
[2011] UGCommC 75


THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
(COMMERCIAL DIVISION)
MISCELLANEOUS APPLICATION NO. 0147 OF 2001

[ARISING FROM CIVIL SUIT NO. 0490 OF 2001]


                  GREENLAND FOREX BUREAU (K) LTD::::::::::::::::::::::::APPLICANT

 


VERSUS
 

GREENLAND BANK LTD       }
(IN LIQUIDATION)                  }::::::::::::::::::::::::::::::::::::::RESPONDENT



BEFORE: HON. LADY JUSTICE IRENE MULYAGONJA KAKOOZA


RULING
The applicant brought this application for leave to appear and defend a suit brought against it for recovery of shs. 760,633,959/=. The application was supported by an affidavit deposed on 15/03/2002 by Kaddu Kiberu, the Chairman and a director in the company. The respondent opposed the application and filed an affidavit deposed on 29/11/2002 by Ben Ssekabira, the Liquidator’s agent.
In his affidavit in support of the application, Kaddu Kiberu averred that the applicant had never operated an account with the respondent bank. Further that the applicant had never borrowed money from the respondent. He further stated that the applicant had a good defence to the suit and that it was just and equitable that leave be granted for the applicant to file a defence and appear to defend the suit.
In his affidavit in reply, Mr. Ssekabira averred that the applicant operated an account No. 01424827-000 with the respondent and that by the 31/05/2001 the said account was overdrawn by shs. 760,633,959/=. A copy of a certificate of balances was attached to the affidavit as Annexure “A”. He further averred that the applicant made several deposits and withdrawals on the account and that the entire statement of account would be produced at the trial. Further that on filing of the instant suit, Mr. Kaddu Kiberu wrote to the Governor of the Bank of Uganda (BOU) and acknowleged the applicant’s indebtedness to the respondent. A copy of the letter was attached to the affidavit as Annexure “B”. Mr. Ssekabira finally averred that the applicant had failed to show that there were any triable issues in the suit and therefore leave should be denied to defend the suit because the applicant’s defence disclosed in the affidavit in support was a sham.
In his submissions for the applicant, Mr. Justine Semuyaba aid that the respondent was closed by the Bank of Uganda on 31/03/99. That in spite of that the plaint showed that the amount outstanding on account at the time was shs. 493,128,588/= to which was added interest to make shs. 760,633,959/= which was claimed in the plaint. He submitted that upon the seizure of the bank, its assets were taken over by BOU which is not a commercial bank. He asserted that since BOU was only a supervisory agency, it could not charge interest on the amount that was outstanding on the applicant’s account. He further argued that Mr. Kiberu’s letter to the Governor, BOU was not an admission of the debt.
In reply, Mr. Matthias Sekatawa submitted that s. 33(5) of the Financial Institutions Statute empowered the realisation of an insolvent institution and book debts are some of the price assets of a financial institution. That as a result the debt continued to attract interest even after the closure of the bank. He further submitted that the plea in the plaint that the plaintiff would rely on a bank statement at the trial did not necessarily entitle the applicant to the grant of an order for leave to defend the suit. He further charged that the applicant’s director’s averment that the applicant did not operate an account with the respondent was a falsehood since there was evidence in his letter to the Governor of BOU that there was indeed an account operated with the respondent bank whose affairs he proposed settlement of to the Governor. He argued that the contents of the letter were an admission of the applicant’s indebtedness to the respondent and that a mere denial of the applicant’s indebtedness to the respondent meant that the applicant’s defence disclosed by affidavit is a sham. He went on to propose that should this court find that the applicant is entitled to leave to defend the suit, then such leave should only be conditional upon the applicant depositing the amount demanded in the plaint in court. He relied on the decision in
Souza Figeurido v. Moorings Hotel Co. Ltd. [1959] EA 245 for that submission.
In rejoinder, Mr. Semuyaba submitted that ss.30 to 33 of the Financial Institutions Statute showed that interest stops accruing upon closure of a bank. Further that the court in
Uganda Transport Co. v. Count De La Pasteur (1954) 21 EACA 123 ruled that it had no jurisdiction to grant a suit under summary procedure if it is not precisely under the rules. That the plaint in this suit was not properly brought under Order 33 CPR and therefore court could not even order that the applicant deposit the amount claimed in the suit. He relied on the decision in Sanghavi & Shah Ltd. v. Joshi [1952] Vol. 7 ULR 4 for the submission that under Order 33 rule 2 CPR, interest can only be claimed if it is based on an agreement for the payment of interest.
He finally submitted that at this stage, all that the court needs to ascertain is whether there are triable issues raised by the applicant to justify the grant of leave to appear and defend the suit. He relied on the decision in
Churanjilal & Co. v. A. H. Adam (1950) 17 EACA 92 for his submission and stated that the application raised several issues of fact and law and thus justified the granting of leave to appear and defend the suit.
It is important to first establish whether the main suit was properly brought under Order 33 (now Order 36) of the CPR. Order 36 rule 2 CPR provides that suits that are specified therein, i.e. where a plaintiff seeks to recover a debt or liquidated demand in money payable by the defendant with or without interest, and where there is no defence to the claim may be brought under summary procedure on a specially endorsed plaint. Examples of claims that may be brought are given and they include contracts, bonds, guarantees, trusts and debts for income tax. The procedure may also be employed in actions for recovery of land.
There are various interpretations of what amounts to a “liquidated demand. In
“The Annual Practice” (1966, Sweet & Maxwell, London) it was stated that a liquidated demand is in the nature of a debt, a specific sum of money due and payable under or by virtue of a contract which is either already ascertained or capable of being ascertained as a mere matter of arithmetic. In “The Supreme Court Practice” (Ed. Jack I. H. Jacobs, 1966, Sweet & Maxwell, London) a liquidated demand is said to be in the nature of a debt, and that if ascertainment of a sum of money even though it be specified or named as a definite figure, requires investigation beyond mere calculations, then the sum is not a debt or liquidated demand but constitutes damages.
In
E. M. Cornwell & Co. v. Shantaguari Dahyabhai Desai (1941) 6 ULR 103, it was held that interest cannot be claimed in a suit under Order 33 CPR unless it is based on an agreement for interest in the document sued on or according to a statute. It was further held that s.26 of the Civil Procedure Act cannot be invoked for the purpose of claiming interest on statutory grounds in a suit under summary procedure. (See also Haji Arjabu Kasule v. F. T. Kawesa [1957] EA 611).
However, there are cases in which a claim for a liquidated demand under Order 36 CPR includes other claims. A suit can seek judgment for a liquidated demand as well as other unliquidated demands. The rule in Order 36 rule 2 would then apply only to those parts of the suit consisting of liquidated demands. Such was the case in
Pan Afric Commodities Ltd. v. Sam Bisase & Co. UCC M/A 508 of 2005 (unreported) where Egonda Ntende, J. entered judgment for part of the sum claimed in the plaint and granted leave to file a defence in respect of a sum of shs. 3m which was not a liquidated amount and had to be proved by evidence. (See also Gupta v. Continental Builders Ltd [1978] KLR 83.)
The plaint in this suit is for a claim of shs. 760,633,959/=, interest at the rate of 25% p.a. from 31/05/2001 till payment in full. The applicant/defendant claims that the amount of shs. 760m included interest. There is however, no evidence as to how that interest came about, or on what basis it was computed. There is also no evidence as to why the interest of shs. 25% was claimed, save for the certificate of balances attached to the affidavit in reply as Annexure “A”; and that was contested by the applicant’s advocate.
There was an indication in the submissions of both counsel that a statement of account of the applicant with the respondent was exhibited at the hearing of the application but I did not have the opportunity of seeing it because this application was heard by my brother, Ogoola, J who has since retired from the bench. I am therefore unable to say with certainty whether the rate of interest was included in that statement or not. I would therefore come to the conclusion that in the absence of any document, i.e. a contract, or statement of account to show how the interest came about, it appears not to have been agreed upon by the parties to this suit.
I would stop at that and grant the applicant leave to defend the suit, but there is an allegation in the respondent’s affidavit in reply that the amount claimed was admitted by Mr. Kaddu Kiberu in his letter to the Governor BOU (Annexure “B” to the affidavit in reply). It therefore behoves me to explore whether the applicant, through the Chairman of its Board of Directors, admitted the debt in the amount claimed in the plaint, so as to justify its endorsement under Order 36 (then 33) of the CPR.
I carefully read Mr. Kiberu’s letter to the Governor BOU. He complained that someone had filed a suit claiming shs. 760m against the applicant; that the applicant was not credit worthy and had been running for 3

years under threats of being taken over by the Central Bank; that cash at hand at the Bureau at the time stood at a miserable KShs 2.9m and the Central Bank of Kenya had observed that it needed capitalization; that it was a waste of time demanding for money from a dead man because the Bureau was virtually dead. He suggested that BOU consider the payment of goodwill to the bureau so that “blood” could be injected into it to run it effectively because there was no possibility that anyone would buy it only to pay the amounts owed by it. I therefore did not agree with counsel for the respondent that Annexure “B” to the affidavit in reply contained an admission of the debt claimed in the plaint.

The plaint in this suit is for a claim of shs. 760,633,959/=, interest at the rate of 25% p.a. from 31/05/2001 till payment in full. The applicant/defendant claims that the amount of shs. 760m included interest. There is however, no evidence as to how that interest came about, or on what basis it was computed. There is also no evidence as to why the interest of shs. 25% was claimed, save for the certificate of balances attached to the affidavit in reply as Annexure “A”; and that was contested by the applicant’s advocate. I therefore came to the conclusion that the respondent’s claim was not properly brought under Order 33 of the CPR.
The second limb to the argument presented by counsel for the applicant was that there were triable issues raised by the affidavit in support of the application to justify the grant of leave to appear and defend the suit. There is a long line of authorities to the effect that on an application for leave to defend a suit, the applicant has got to prove that there is a bona fide triable issue of fact or law that he will advance in defence of the suit. In Churanjilal & Co. v. A. H. Adam (1950) 17 EACA 92, the Court of Appeal for East Africa ruled that a defendant who has a stateable and arguable defence must be given the opportunity to state and argue it before court. The High Court of Uganda followed that decision in Maluku Interglobal Trade Agency v. Bank of Uganda [1985] HCB 65, at 66 where the principle was succinctly laid down as follows:-
“Before leave to appear and defend is granted the defendant must show by affidavit or otherwise that there is a bona fide triable issue of fact or law. When there is a reasonable ground of defence to the claim, the defendant 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.”
There is no doubt in this case that apart from the plaint having been wrongly endorsed, the applicant has stated two issue of fact that would justify the grant of leave to defend the suit. It was not clear what the principle amount due to the respondent was on the basis of the plaint. Neither was it clear how the interest added onto the amount of shs. 493,128,588/=, which the respondent claimed to be the closing balance on the Central Bank taking over the assets of the applicant, was computed.
The applicant has also raised an issue of law that has got to be disposed of. It was not clear on the basis of the evidence on record whether the debt held by the applicant attracted interest under the Financial Institutions Statute or not. That issue has to be canvassed.
In conclusion therefore, the applicant made out a good case for leave to be granted to her to defend the suit. The applicant is therefore granted unconditional leave to file a defence in the suit and the same shall be filed within 7 days from the date of this order. Costs of this application shall abide the result of the main suit.
 
Irene Mulyagonja Kakooza
JUDGE
20/04/2011