Court name
Commercial Court of Uganda
Judgment date
20 August 2013

Kato & 12 Ors v International Holdings (U) Ltd (Miscellaneous Application-2013/247) [2013] UGCommC 145 (20 August 2013);

Cite this case
[2013] UGCommC 145

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL COURT DIVISION)

MISC. APPLICATION NO. 247 OF 2013

(Arising out of Civil Suit No. 183 of 2013)

 

  1. KATO MOHAMMED
  2. EVE KALULE NAMIIRO
  3. LUKIA LUGOLOBI
  4. BUKENYA SULAIMAN
  5. EDDY KYEYUNE
  6. ZAM KAKANDE
  7. MUTEBI FRED
  8. WINNIE OKUMU
  9. BARBRAH KESIMIRE WALIGO
  10. SUZAN OKELLO
  11. SEBBALE SAMUEL
  12. HAWA SANYU
  13. REHEMA ZAMUNYU

t/a SUPER GARMENTS::::::::::::::::::::::::::::::::::::::::::::::: APPLICANTS

VERSUS

INTERNATIONAL HOLDINGS (U) LTD::::::::::::::::::::::::: RESPONDENT

 

BEFORE: HON. LADY JUSTICE HELLEN OBURA

RULING

 

This application was brought by chamber summons under O.41 rules 2(1) and 9 of the Civil Procedure Rules (CPR), seeking for an order that a temporary injunction doth issue to restrain the defendant/respondent from evicting the applicants from premises comprised in Plot 11 Luwum Street (Super Garments Shop) (hereinafter referred to as the suit premises) until disposal of the main suit or until further orders of this court. The applicants also seek that costs of the application be provided for.

 

The application is supported by the affidavits of Kato Mohammed, Eve Kalule Namiiro, Lukia Lugolobi and Winnie Okumu who are some of the applicants.  The respondent opposed the application on the grounds stated in an affidavit in reply deposed by Vaidyanathan S., the manager of the respondent’s property. In response the applicants filed an affidavit in rejoinder deposed by Kato Mohammed.

 

The grounds of the application as contained in the chamber summons are firstly, that the respondent intends to evict the applicants from the suit premises for which the applicants have filed a suit which is still pending and has high chances of success. The second ground is that if the applicants are evicted from the above premises they will suffer irreparable loss and injury which may not be atoned for by an award of damages. Thirdly, that the balance of convenience tilts in favour that the status quo be maintained and lastly that it is fair, equitable and in the interest of justice that this application be granted.

 

The brief background to this application is that the respondent entered into a tenancy agreement for Shop No.1 Pioneer Mansion with Bwiragura Petrollina and Tindyebwa Sam both trading as Super Garments. The said tenancy was subject to renewal every year. The said Bwiragura Petrollina and Tindyebwa Sam guaranteed and duly paid the rent through the tenancy period under the name and style of Super Garments. On 19th December 2012 the respondent offered to renew the tenancy for one further term of one year ending December 2013. However, the offer was rejected by the guarantors of Super Garments vide a letter dated 25th March 2013. On 28th March 2013 the respondent issued Super Garments with a notice terminating the tenancy having rejected the offer to renew. It is upon that notice that the applicants brought this action.

 

When this application came up for hearing on 6/05/2013, Mr. Kizza Aaron represented the applicants while Mr. Sebuliba Byrd and Ms. Rebecca Nakiranda represented the respondent. Upon direction by this court both counsel filed written submissions in the matter.

 

On the existence of a prima facie case, counsel for the applicant argued that the applicants/plaintiffs have sued the respondent/defendant for a declaration that the intended termination of their tenancy is wrongful, a perpetual injunction to restrain the defendant from breaching the tenancy agreement between the applicants and respondent, general damages and costs of the suit. It is argued for the applicants that the suit has high chances of success and it raises triable issues which are a key consideration for the grant of a temporary injunction. This argument was based on the authority of James Musisi Senkaaba v Ruth Kalyesubula Misc. Application No. 329 of 2011. In that regard, the applicant’s counsel indicated that the triable issues raised are whether the respondent’s threatened eviction of the tenants is lawful and whether the applicants are entitled to general damages.

 

In addition, the applicant’s counsel submitted that the applicant’s case is strong because they have developed strong goodwill to the suit premises which is a proprietary right worth protecting, have been alive to their contractual obligations and are in possession of the suit premises as sitting tenants. It is their counsel’s contention that the applicants enjoy the first option to purchase, hire or rent thereof.

 

In regard to irreparable injury, it is the applicants’ case that an award of damages would not adequately atone for loss and/or eviction from the suit commercial premises. Counsel for the applicants submitted that the applicants are plying their trade which has generated immense goodwill in the said premises. It is contended that the premises are strategically located in the heart of Kampala’s Central business district and such premises would be difficult to find as they are scarce. The applicants relied on the case of Muljibhai Madhvan & Company Ltd v Madhcan International Ltd & Another HCCS No. 607 of 1990 wherein Justice G.M Okello found that it is common knowledge that both residential and commercial accommodation either in Kampala or Jinja is very scarce and loss of one such accommodation constitutes a loss which cannot adequately be compensated by an award of damages.

 

Furthermore, it is submitted for the applicants that the balance of convenience lies in the applicants’ favour given that they are presently in occupation/possession of the suit premises, their eviction would irreparably injure them, they are religiously paying their rent to the respondents and alternative commercial accommodation being scarce would be difficult to find in the event that they are evicted.

 

In reply, counsel for the respondent submitted that the applicants have not shown that they have a prima facie case with a probability of success in the main suit because there is no tenancy agreement between the applicants and the respondent. It is the respondent’s case that it never entered into any tenancy agreement with the applicants since the respondent only entered into a tenancy agreement with Bwiragura Petronilla and Tindyebwa Sam which was subject to renewal every year.

 

It is also argued for the respondent that under clause xvii, the tenancy agreement expressly prohibited subletting the premises to another party without the respondent’s permission or consent. While referring to paragraphs 14 and 21 of the affidavit in rejoinder counsel for the respondent contended that the applicants even confirmed the fact that they were paying rent to Bwiragura Petronilla and Tindyebwa Sam as sub-tenants and not as a partnership.

 

It is further argued for the respondent that even if a tenancy existed with the applicants the same expired and was determined as Bwiragura Petronilla and Tindyebwa Sam rejected the offer to renew the tenancy. Furthermore, the respondent’s counsel argued that even if the applicants were partners, which fact is denied, they are bound by the acts of their fellow partners in rejecting to renew the tenancy agreement as provided for in Section 6 of the Partnership Act of 2010.

 

With regard to irreparable injury, it is submitted for the respondent that the applicants in their plaint under paragraph 7 prayed for special damages of Ug. Shs 60,000,000/= for loss of goodwill. This therefore means that if any loss occurs it can be quantified by this court and adequately compensated for. I have not found any submissions in rejoinder from the applicant’s counsel to answer the respondent’s assertions above.  Before delving into the merits of this application, I wish to first deal with the competence of this application. The respondent’s counsel first challenged the competency of the application and supporting affidavits on the grounds that court fees were not paid for the chamber summons, its supporting affidavits and the affidavit in rejoinder which should be struck out on the basis of Order 9 rule 16 of the CPR and the case of Unta Exports Ltd v Customs [1970] EA 648.

As far as non payment of court fees is concerned, Order 9 rule 16 of the CPR provides;

 

“Where on the day fixed for filing a defence or to appear and answer, it is found that the summons has not been served upon the defendant in consequence of the failure of the plaintiff to pay the court fee or charges, if any, for the service, the court may make an order that the suit be dismissed.”

 

Going by the dictum in the case of Unta Exports Ltd v Customs (supra) a document is not properly filed until the fees are paid. However, in the case of Lawrence Muwanga v Stephen Kyeyune CACA No. 20 of 2000 which was upheld on appeal in SCCA No. 12 of 2001, it was held;

 

“A complaint against non payment of court fees is a minor procedural and technical objection which does not and should not affect the adjudication of substantive justice as envisaged in Article 126 (2) (e) of the 1995 Constitution of the Republic of Uganda. The remedy for non payment of court fees would have been invocation of rule 6 of the Court Fees, Fines and Deposit Rules to order a defaulting party to pay the necessary court fees.”  

 

I have perused the court file and found that it is endorsed with a payment stamp for the chamber summons. A fee of 1500 under receipt No. 1827451 was paid on 11/4/2013 and endorsed with a stamp of this court although the chamber summons was filed on 10/4/2013. In my view based on the above authority, the applicants validated the filing of the summons the following day by paying the requisite fees. Since I am satisfied that court fees were paid for the application before this court, I find no merit in the objection raised by the respondent in that regard.

 

The second objection raised by the respondent is that the applicants defied the court order to file their rejoinder by 8th May 2013 and instead filed it the next day on 9th May 2013 without an order extending time yet such deliberate disobedience of court orders had been condemned by the Court of Appeal in the case of Amrit Goyal v Herichand Goyal and 3 Others Civil Application Number 109 of 2004.

 

On 6th May 2013, this court granted the applicants leave to file a rejoinder to the affidavit in reply by Wednesday 8/05/2013. This was not done. The applicants’ rejoinder was received by this court on 9/05/2013 at 9:40am as per this court stamp. Indeed this court cannot condone blatant defiance of court orders. However, I have taken into account the one day delay and the fact that the respondents have not alluded to any prejudice they have suffered as a result of the late filing. I also wish to emphasize that Article 126 (2) (e) of the 1995 Constitution  enjoins this court to administer substantive justice without undue regard to technicalities such as filing an affidavit in rejoinder one day late like in the instant case. In have also taken note of section 96 of the Civil Procedure Act which provides:

 

“Where any period is fixed or granted by the court for the doing of any act prescribed or allowed by this Act, the court may, in its discretion, from time to time, enlarge that period, even though the period originally fixed or granted may have expired.”

 

It is my view that the discretionary powers of this court to enlarge time for the applicants to file their affidavit in rejoinder is not limited especially where no prejudice or substantial miscarriage of justice will be occasioned to the respondent by allowing the rejoinder. In exercise of my discretion, I accordingly overlook this lapse and overrule the objections raised by the respondent and proceed to determine the merits of this application in the interest of substantive justice.

I have read the pleadings in this matter with the relevant documents attached. I have also given due consideration to the submissions made by both counsel. It is trite that the purpose of a temporary injunction is to preserve matters in status quo until questions to be investigated in the suit can be finally disposed of. See Kiyimba Kaggwa v Abdu Nasser Katende [1985] HCB 43.

The conditions for grant of an interlocutory injunction as set out by Spry VP in the leading case of Geilla v Cassman Brown and Co. Ltd [1973] EA 358 are as follows; (1).An applicant must show a prima facie case with a probability of success; (2). An interlocutory injunction will not be granted unless the applicant might otherwise suffer irreparable injury which would not be adequately compensated for by damages; (3). If the court is in doubt, it will decide the application on a balance of convenience.

Turning to the first condition, I am aware that for purposes of grant of a temporary injunction it is enough for the applicant to prove that there are triable issues that merit judicial consideration. At this stage there is no requirement for the plaintiff to establish a strong prima facie case with a high probability of success. Whereas it was the submission of counsel for the applicants that there is a prima facie case, the respondent’s counsel contended otherwise. The applicant’s counsel indicated that the triable issues raised are whether the respondent’s threatened eviction of the tenants is lawful and whether the applicants are entitled to general damages since they have developed strong goodwill to the suit premises which is a proprietary right worth protecting. On the other hand the respondent insists that they have no tenancy agreement with the applicants.

 

I have seen a copy of a letter attached to the affidavit in reply. The respondent wrote that letter to Super Garments to terminate its tenancy on 28th March 2013 and copied to the 1st applicant. The essence of this letter was that the 30 days notice to vacate the respondent’s premises was effective on 28th March 2013. As such the applicants were not expected to be in the suit premises by 28th April 2013. The applicant contends that the respondent has always renewed their tenancy over the years mostly by its conduct of accepting and collecting rent from them. I have perused Group Annexture “A” to the affidavit in rejoinder and seen two statements of accounts for the period 01/04/2013 to 08/04/2013 and for the period 01/05/2013 to 07/05/2013.That document shows that on 2nd April 2013 the Super Garments under which the applicants allege to be trading paid rent for 01 April 2013 to 30 April 2013 in the sum of Ug. Shs. 4,763,250/=. The applicants made other payments for rates, service charges, water and electricity charges.

Similarly, on 2nd May 2013 Super Garments paid rent for 01 May 2013 to 31 May 2013 in the sum of Ug. Shs. 4,745,000/= in addition to other payments for rates, service charge water and electricity for the same period.  These payments have left some unanswered questions in my mind because they were effected even after the eviction notice was issued and the applicants had filed this suit. First of all, it is not clear why the respondent continued to receive rent from Super Garments that had requested for termination of its tenancy on 25th March 2013 if the content of annexture “D” to the affidavit in reply is to be believed. Secondly, it is also not clear to me whether Super Garments is a business name, partnership or an incorporated company especially in view of the applicants’ contention that they were all trading under it and the respondent’s case that it entered into a tenancy agreement with Bwiragura Petronilla and Tindyebwa Sam both trading as Super Garments.

I have also perused the tenancy agreement dated 1st January 2003 attached to the affidavit in support of the application as annexture “A”. In column 2 of the schedule thereto found at page 8, the tenant is referred to as Super Garments Ltd and at the bottom of that page the 1st applicant and Tindyebwa Sam were stated to be the guarantors. If indeed the respondent has not had any dealings with the applicants then why did the 1st applicant’s name appear in the tenancy agreement as a guarantor together with the one they recognize as the lawful tenant?

I have equally addressed my mind to the respondent’s contention that the applicant’s occupation of the suit premises amounts to trespass because the tenancy agreement prohibited sub-letting the premises to another party without the respondent’s permission or consent. I have found this contention rather interesting because I do not see how thirteen adults would occupy the respondent’s premises for many years without them being noticed and the respondent raising concern to their lawful tenants. I believe there is more than meets the eye.

It is therefore my firm view that all these questions need to be properly addressed in the main suit by adducing oral evidence as opposed to the scanty affidavit evidence for the best interest of justice to be served. To my mind, the above questions do raise a prima-facie case that the applicants have been tenants of the respondent all trading as Super Garments. In the circumstances, I would agree that this case merit preserving the status quo so that the substantive dispute is properly investigated and conclusively determined. I am therefore satisfied that the applicants have met the first condition for the grant of this application.

As regards the second condition, it was contended for the applicants that an award of damages would not adequately atone for eviction from the strategically located commercial premises in which they have generated immense goodwill. Conversely, it is the respondent’ case that the applicants prayed for special damages of Ug. Shs. 60,000,000/= for loss of goodwill and so if any loss occurs, it can be quantified by this court and adequately compensated for by damages. 

In American Cyanamid Co. v Ethicon Ltd [1975] 1 All ER 504 Lord Diplock laid down the test that is applied for this condition and the principles were followed by the High Court of Uganda in the case of Pan African Commodities Ltd & Another v Barclays Bank Plc HCMA No. 385 of 2007 to the effect that if damages in the measure recoverable at common law would be an adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted however strong the plaintiff’s case appears at this stage.

I have considered the respondent’s argument that this court may be capable of assessing and awarding the applicant damages for the loss of the suit property. I must however add that the respondent’s ability to pay if the applicants are the successful party in the main suit must also be taken into account. In JK Sentongo v Shell (U) Ltd [1995] 111 KALR 1 a temporary injunction was denied because the injury to be suffered by the applicant could be adequately atoned for by damages since it was common knowledge that the respondent was easily the richest oil company in Uganda and would adequately compensate the applicants if need arose. In the instant case, however, much as the respondent’s counsel contended that the respondent is a financially sound company owning a number of properties in Kampala, there is no proof of the respondent’s financial strength on record for this court to satisfy itself about the contention.

 

While I agree that the case of Muljibhai Madhvan & Company Ltd v Madhcan International Ltd & Another (supra) which was decided in 1990 may not reflect the present situation in Kampala, it is noteworthy that the applicants have been operating a garments shop in the suit premises since 1998 for which they have built excellent goodwill and reputation as garments dealers. In that context, the applicants’ contention that loss of the goodwill associated with the business premises they have occupied for years would have far reaching economic consequences that may not be adequately compensated in monetary terms is not farfetched.

For that reason, coupled with the existence of a triable issue, the balance of convenience favors granting this application since the respondent is still receiving rent from the applicants and will still be at liberty to take over the premises in the event that it becomes the successful party in the main suit.

In the result, this application is allowed and the orders prayed for granted. Costs shall be in the main cause.

I so order.

Dated this 20th day of August 2013.

 

Hellen Obura

JUDGE

Ruling delivered in chambers at 3.00 pm in the presence of Mr. Kizza Aaron for the applicants and Mr. Byrd Ssebuliba for the respondent. The 1st applicant and two officials of the respondent were also present.

 

JUDGE

20/08/13