Court name
Commercial Court of Uganda
Judgment date
20 August 2014

Tools and Fasteners Ltd v Khimani Ravji Jadva (Miscellaneous Application-2014/326) [2014] UGCommC 113 (20 August 2014);

Cite this case
[2014] UGCommC 113

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

 

MISCELLENOUS APPLICATION NO. 326 OF 2014

(ARISING FROM CIVIL SUIT NO. 278 OF 2014)

 

TOOLS AND FASTERNERS LTD  … APPLICANT / DEFENDANT

 

VERSUS

 

KHIMANI RAVJI JADVA ……………. RESPONDENT / PLAINTIFF

 

BEFORE HON. LADY JUSTICE FLAVIA SENOGA ANGLIN

 

RULING

 

This is an application for unconditional leave to appear and defend the suit in its entirety.  The costs of the suit were also applied for.  The Application was made under the provisions of 0.36 rr 1, 3, 4, and 10, 0.52 rr 1, 2 and 3 C.P.R, S. 98 C.P.A and S. 33 Judicature Act.  The application is supported by an affidavit and there are also affidavits in reply and rejoinder.

 

When the application was called for hearing, Counsel for the Applicant gave the background thereof.  The application arises from summary suit No. 278/14 where the Respondent is the Plaintiff.  The Applicants as the Defendants contest every claim set out in the summary suit.

 

Counsel then submitted that the affidavit in support raises triable issues.  And that the principle of law is that once triable issues are raised, then a summary judgment cannot be given.  He emphasized that, even a single issue is sufficient for court to grant the application.

 

Further that, the Applicant does not have to show a good defence on the merits, court only needs to be satisfied that there are triable issues.

 

Court was referred to H.CC.S 63/10 filed by the Plaintiff/Respondent – referred to paragraph 6 of the supporting affidavit – Annexture RA2- where court directed that the main suit was deemed withdrawn by the trial court and that the transfer deed be given to the Applicants / defendants.

 

Annexture RA3 – Counsel pointed out, was an attempt by Counsel for the Respondent to extract the court order.  However, that, there is controversy surrounding the order in that it was revoked by the Registrar Land Division on 17.05.12.  And that the order sanctioned by court is Annexture RA4.

 

Counsel argued that by the Respondent attaching the ruling, without pointing out which counsel order he is aware of, it is ambiguous as to what he seeks to enforce.

 

That the order of 17.05.13 paragraph 2 – filed after withdrawal with costs is a mere restatement of what is set out in the settlement agreement.

 

It was then asserted that the contradiction before court is that the Respondent in paragraph 6 of the affidavit in reply is contesting his own obligation to effect a transfer directed by court order. That this is a triable issue.

 

Counsel also submitted that the second issue is brought out in paragraph 12 of the affidavit in reply page 2 – it is stated that “amount claimed in the plaint was paid ”. That the Respondent is not relying on the settlement agreement.  However that, the plaint relied upon was withdrawn by the trial court i.e. C.S. 63/10.  And therefore the Respondent is claiming more that the settlement agreement.

 

The third issue, Counsel stated is set out in paragraph 7 of the affidavit in reply. – Where the Respondent claiming that he is personally owed the interest money.  But that the Applicant contests that claim because the Respondent assigned his debt obligation to the Applicant. – Annexture RA2 – line 7 was relied upon to support the argument.

 

It was Counsel’s contention that the “He” in that line refers to the Respondent.  And that his debt obligation was taken up by the Applicant and Respondent cannot be heard to claim that he is owed money when he assigned his obligation to the Applicant.

 

It is on the basis of those 3 outlined issues, Counsel stated, that the Applicant opposes the suit and prays for unconditional leave to appear and defend.

 

Counsel also pointed out that while the Respondent’s reply raises issue that application was filed out of time that is not the case.

 

The plaint according to the Respondent was served on 25.04.14.  Under 0.51 r 9 (2) C.P.R the date of service is not taken into account when computing time within which orders should be complied with.

 

That in the present case, computation of time began on 26.04.14 and that the following week had a public holiday has also to be taken into account.

 

Insisting that the application was filed in time, Counsel reiterated his earlier prayers.

 

Counsel for the Respondent opposed the application on the ground that the Applicant had failed to raise any triable issues of law or fact that merit examination by the court.

 

He pointed out that, while the Applicant had given the background of the suit, material information that would assist the court arrive at a just decision was left out.

 

A lengthy account of the background was then given as follows: That by H.C. Land Division C.S. 63/10, the Respondent and Another filed a suit against the Applicant and Another; claiming that the Applicant was owner of 50% interest in property comprised in LRV 3373, Folio 19, Plot2 Main Access Road, Kampala.

 

The suit was filed on 03. 03.10, and raised serious allegations of fraud and forgery against the Applicant and Co. Defendant.

 

By then, Counsel explained, 25% of the shares on the property which the Respondent had acquired from one Kasia, (Co. Defendant) had already been fraudulently and illegally transferred to the Applicant.

 

Realizing the danger ahead of them, Counsel further contended, the two on 25.07.10 hurriedly signed a settlement agreement.  The Applicant agreed to pay for the value of the 50% of the Respondent and another.  Thus the suit was overtaken by events.

 

The Respondent proposed withdrawal of the suit with each party bearing its own costs, but the Applicant resisted and filed Misc. Application No. 09/11.  A ruling was given – (attached to application) together with plaint Annexture A and agreement as Annexture B.

 

That after the ruling, the parties fell back to the terms and conditions of the agreement. And that, read as a whole, the agreement meant that the Applicant had to pay shs. 400,000,000/- as consideration for the interests of the Respondent in the suit property.

 

 

The money had to be paid within 18 months and any amount outstanding thereafter would attract interest.  The agreement was dated 25.07.10 and 18 months expired in January 2012.

 

It was Counsel’s argument that, from that time, the Respondent was entitled to charge interest on the outstanding balance, within the terms and conditions of the agreement.

 

The Applicant, Counsel contended, did not complete payment until early 2013 – Annexture D to the plaint- indicates when and how much was paid by Applicant.  And that it is the outstanding interest that the Respondent seeks to recover in the suit.

 

It was submitted that the Applicant had failed to show court that he is absolved from payment of the interest or is not liable at all after admitting that that is the agreement containing the rights and obligations of the parties.

 

Further that, the Applicant had full control and possession of the property since 2010, collecting rent and deriving all benefits without payment.

 

And that, given what transpired previously, the Respondent is not in position to sign off and transfer its interests to the Applicant without receiving payment.

 

Contending that the Applicant had made allegations that are off point, Counsel for the Respondent affirmed that the Respondent is willing to sign the transfer after payment is made within the terms of the agreement. -  Referred to ruling.

 

He then prayed that the application be allowed in the interests of justice and a decree entered in the terms set out in the suit, together with costs.

 

The assignment of the debt as alleged by the Applicant was denied, claiming that it is clear from the settlement agreement if read as a whole, means that Respondent had to release payment for his property through a third party.  The case of Abubaker Kato Kasule vs. T. Muhwezi [1992-93] HCB 212 was relied upon for the holding that “issues raised have to be real and not sham and there has to be a plausible defence”.  And that of Maluku Interglobal Agency Ltd vs. Bank of Uganda [1985] HCB 65 – for the holding that “a defence ought to be stated with sufficient particularity to appear genuine”.

 

It was then argued that, the Applicant in the present case had no genuine defence but only diversionary statements meant to mislead court.  That the draft defence attached indicates it is a sham.

 

It was then prayed that if court is inclined to grant the application, then it should be conditional upon the Applicant depositing in court the amount claimed or such other amount that court deems appropriate.

The issue of the application being filed out of time was left to the court, but Counsel insisted that it was obvious that even excluding public holidays that application was out of line, although Applicant did not seek leave of court to cure the omission.

 

In rejoinder, Counsel for Applicant reiterated earlier submissions and prayers.

 

The submissions of both Counsel have been heard and are given the best consideration. Decided cases have established that in applications of this nature. “The burden is on the Applicant to show that there is a triable issue of fact or law” – See Hasmani vs. Banque De Congo Belge (1938) 5 EACA 59. And that “if an affidavit discloses triable issues of fact, summary judgment should not be granted ”. – See Kirat Singh & Co. vs. Punja Meghji (1952) 19 EACA 33 and Standard Chartered Bank vs. Walker [1982] 3 ALL ER 937.

 

If there is one triable issue, if bonafide, that would entitle a defendant to unconditional leave to defend in an application, leave should be granted ” – See Five Continents Ltd vs. Mpata Investments Ltd C.A. 306/2000 [2003] KLR 443, [2003] IEA1

 

As pointed out by Counsel for the Respondents and rightly so, “the defence must be stated with sufficient particularity to appear genuine.  General or vague statements denying liability will not suffice”. – Maluku Interglobal Trade Agency Ltd vs. Bank of Uganda (Supra)

 

And in addition “the court must study the grounds raised and ascertain whether they raise real issues and not sham ones.  That is, court must be certain that if the facts alleged by the Applicant / Defendant were established, there would be a plausible defence.” - Kasule vs. Muhwezi (Supra).

 

It is apparent from the application and supporting documents and the replies together with the submissions that, the dispute in the property case stems from an agreement signed by the parties.

 

The agreement has unclear terms regarding the obligations of each party; and each party is alleging different interpretations of the agreement in their affidavits.  The issue to be determined here therefore is whether the allegations in the affidavits and the court proceedings create a genuine triable issues of fact or law.

 

As already mentioned, looking at the terms of the agreement, it raises a number of issues.  The first issue is when the Respondent/Plaintiff had obligation to transfer ownership of his shares of the property, was it immediately after signing the agreement or was it after payment of the shs. 400,000,000/= per month plus 18% VAT?

 

The terms of the agreement can be interpreted in different ways, thereby raising genuine issues of fact.

 

The second issue is whether, the Respondent / Plaintiff is claiming to be owed more than was agreed upon in the court approved settlement.  It is not clear from the settlement terms when interest began to accrue.  The agreement is ambiguous as to whether the payment is conditional on recovering ownership of the shares or whether transfer of the Respondent / Plaintiff‘s ownership is conditional on receipt of the full purchase price.  It is not indicated whether interest was chargeable beginning 18 months from the date of signing or 18 months from the transfer of ownership of shares.

 

From the foregoing, I find that the Applicant has established that there are triable issues of fact. There is need for court to consider the complete transaction; including the intention of the parties at the time they signed the settlement agreement, in order to determine the rights and obligations of the parties.

 

The issues as to whether the application was filed out of time is answered in the negative for the following reasons:-

 

The Plaint was filed on 24.04.14.  The Applicant / Defendant was required to file a defence within 10 days from the date of service of the summons in summary suit.

 

The affidavit of service of the summons dated 07.05.14 indicates that the summons were served on 25.04.14 – which was a Friday.  The date of service is not included in the computation of time.  The next 2 days i.e. 26th and 27th April were a weekend.  That means that time began to run on 28th April.  The fourth day from the date time began to run was 1.05.14 – a public holiday as its Labour day.  2nd May, 2014 was a Friday.  Followed by 2 days Saturday and Sunday when courts are not open.

 

From my calculations, the application was filed within 6 days and was within the 10 days prescribed by the law.

 

The application was filed within time and there was no need for Applicant to apply to file the application out of time.

 

The application is allowed for those reasons.

 

The Applicant is granted unconditional leave to appear and defend.  The defence should be filed within 15 days from the date of this ruling.

 

Costs to abide outcome of the suit.

 

 

FLAVIA SENOGA ANGLIN

JUDGE

20.08.14