Court name
Commercial Court of Uganda
Judgment date
14 October 2014

Kyeyune v R.L Jain (Miscellaneous Application-2014/421) [2014] UGCommC 149 (14 October 2014);

Cite this case
[2014] UGCommC 149

THE REPUBLIC OF UGANDA,

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISCELLANEOUS APPLICATION NO 421 OF 2014

ARISING FROM CIVIL SUIT NO 318 OF 2014

GEORGE WILLIAM SIKIBWABU KYEYUNE}......................APPLICANT/DEFENDANT

VS

R.L JAIN}.......................................................................RESPONDENT/PLAINTIFF

BEFORE HON. MR. JUSTICE CHRISTOPHER MADRAMA IZAMA

RULING

The Applicant’s application is for unconditional leave to defend a suit filed by the Respondent/Plaintiff by way of a summary suit against him and for costs of the application to be provided for.

There are seven grounds of the application. The first ground is that the Applicant is not liable to the Respondent in the sums claimed or at all. Secondly the terms of the loan agreement and promise are clear as to the remedies of the defaulting party and the same has not been fully exercised or at all. Thirdly the loan agreement and promise to pay the loan monies are documents charged with stamp duty under section 2 and 42 of the Stamps Act that cannot be used in a civil court process without first paying stamp duty on them. Fourthly the Applicant avers that the interest of 10% per month is unconscionable and unenforceable in a court of law. Fifthly the Applicant avers that there are triable issues arising out of the main suit. Sixthly it is in the interest of justice, and it is just and equitable that the Applicant/Defendant is granted unconditional leave to defend the main suit on its merits. Lastly the Applicant avers that he has a good defence to the Plaintiff’s claim.

The application is supported by the affidavit of George William Kikibwabu Kyeyune. His deposition is that he borrowed 10,000,000/= Uganda shillings and promised to refund the money within a period of one month. In default the lender was entitled to attach the secured properties that is readily available namely motor vehicle registration number UAF 953 V whose logbook was handed over to the Plaintiff/Respondent. The deponent did not freely agree to a 10% interest per month but was overwhelmed by his dire need for the loan to accept 120% interest per annum on the borrowed sums. It is unjust enrichment for the process of court to be lent to an illegal trader in money lending to charge beyond 24% interest per annum as provided for under the Money Lenders Act. Upon the Applicant’s failure to refund the borrowed money within one month, he went and explained his predicament to the Respondent who told him that he would not confiscate his car for just 10,000,000/= Uganda shillings or even sue for recovery and that he would be patient with the Applicant. On the ground of advice of his lawyers the Defendant asserts that the suit is premature, frivolous and vexatious on the basis of the loan agreement. An agreement to borrow money is a chargeable deed under the Stamps Act and the document thereof cannot be used in a court of law without payment of stamp duty.

It was unjust for the Respondent to promise that he would not charge the Applicant beyond 11,000,000/= Uganda shillings to come after one year and demand for over 53,000,000/= in total disregard of and against the spirit and content of the loan agreement and the promise to refund the borrowed money. It is in the interest of justice that leave is granted to defend the suit.

By an affidavit sworn by one Nyiringiye Ponsiano on 16 September 2014 and filed on court record on 17 September 2014, the deponent deposes that he is a process server of the High Court. On 2 June 2014 he received the notice of motion and affidavit in support to be served on Messieurs Odokel Opolot and Company Advocates located on Ambassador House Second Floor Kampala Road. On the same day 2 June 2014, he proceeded to the said advocates to serve the notice of motion and affidavit in support on the said firm of advocates and served it on the Office Secretary, one Maureen who had authorisation after he talked to the handling counsel Mr Odokel Opolot who duly stamped and acknowledged receipt of the court process. The attached annexure "A" to the affidavit shows that the said firm of advocates received the notice of motion on 2 June 2014. The application had been issued on the 29th of May 2014. It was fixed for hearing on 17th of September 2014 at 930 o'clock in the morning.

The application came for hearing on 17 September 2014 and Counsel Odokel Opolot as well as the Applicants Counsel appeared in court. Counsel Opolot sought an adjournment to receive formal instructions from the Respondent/Plaintiff who had formerly called him and asked him to appear in the matter. The application was adjourned with costs to the Applicant to the 6th of October 2014 at 12.00 noon. On 6 October 2014 Bemanyisa Adonijah Counsel for the Applicant appeared for the hearing but there was nobody for the Respondent/Plaintiff. Consequently upon the application of the Applicant, the application proceeded ex parte under Order 9 rule 20 of the Civil Procedure Rules.

The Applicant’s application is for unconditional leave to defend the summary suit and for costs of the application to be in the cause. The Application is brought under order 36 rules 4 and 8, order 52 rules 1, 3 and 3 of the Civil Procedure Rules and section 42 of the Stamps Act. The application was served on the Respondent but no affidavit in reply to the application was filed.

The grounds for the application are that the Plaintiff claims ‘exorbitant’ interest of 120% per annum contrary to the Money Lenders Act when the Plaintiff avers in the plaint that he is a money lender.   Secondly the suit is frivolous and premature and the Applicant seeks leave to defend the suit brought against him.  The third ground is that the Applicant intends to lead evidence to prove that the pleadings as filed offend section 2 and 42 of the Stamps Act which require charging of stamp duty before exhibits are used in court. The other grounds are in the application.

In an application for leave to appear and defend the Applicant has to demonstrate whether there is a triable issue or question of fact or law in dispute. In this case counsel assets that the Applicant has demonstrated that there is a question of interest as to whether it is tenable in law. Secondly there is a question of admissibility of evidence. Thirdly there is an issue as to whether the suit is not premature. Counsel relies on Miter Investments Ltd vs. East African Portland Cement Company Ltd HCMA 336 of 2012. The same principle was upheld in Broadband Company vs. Joram Mugume HCMA No 363 of 2013 by Hon Justice Billy Kainamura at page 2 of his ruling.

Furthermore Counsel submitted on whether the Applicant has a plausible defence. The issues presented disclose plausible defences. The Applicant is able and willing to defend the suit as being contrary to the agreed contract. The contract was for money lending of 10 million to be repaid within one month. In default of which the Plaintiff had liberty to impound MV UAF 950 V. In default the vehicle could have been impounded but the remedy was not exercised. The prayers of the Applicant should be granted.

Ruling

I have carefully considered the Applicant’s application as summarised above as well as the submissions of the Applicants counsel. The application proceeded ex parte.

Messieurs Odokel Opolot and Company Advocates are shown by the record to have filed a summary suit under Order 36 rule 2 of the Civil Procedure Rules in HCCS 318 of 2014 with the Respondent as the Plaintiff and the Applicant as the Defendant. Summons in a summary suit on plaint were issued on the 13th of May 2014. The summons clearly stipulates that the Defendant is required within 10 days from the service of the summons to apply for leave to appear and defend the suit. Consequently counsel who filed the action is counsel on record in the summary suit and was properly served with the application for leave to appear and defend the suit. When the Plaintiff's counsel appeared on 17 September 2014 and informed the court that he wanted to seek further instructions on the application, he never came back on the date fixed for hearing of the application after he got an adjournment to possibly file an affidavit in reply.

In the circumstances the application was properly served on the Plaintiff's counsel and the Plaintiff's counsel is deemed to be counsel on record with proper instructions to handle the plaint as well as any matter arising from the summary suit which includes an application for leave to appear and defend the suit.

I agree with the Applicants submission that an application for leave to defend a summary suit will be granted if there are bona fide triable issues of fact or law which merit judicial consideration.

In the summary suit the Plaintiff/Respondent’s to this application claims Uganda shillings 53,070,000/= together with costs of the suit against the Applicant/Defendant. In the facts constituting the cause of action the Plaintiff pleads that under a loan agreement dated 2nd of November 2012 he advanced to the Defendant a short-term loan amounting to Uganda shillings 10,000,000/= at a monthly interest rate of 10%. The loan agreement is attached as annexure "A" and is entitled memorandum of understanding/loan agreement between the Respondent and the Applicant. Paragraph 2 of the memorandum of understanding stipulates that the loan advanced would be for a period of one month and the Applicant was supposed to pay back Uganda shillings 11,000,000/=. Secondly after one month the amount claimed would carry interest of 10% per month with a monthly rest till the outstanding amount is fully paid. It further provides that "that means that the interest would be accumulated and becomes the principle for the future month till the debt is fully settled."

The question of whether the Plaintiff/Respondent to this application is entitled to charge interest of 10% per month amounting to 120% per annum is a question of law and raises a bona fide triable issue. The question of whether the Plaintiff/Respondent is a moneylender is also a matter of fact that can be tried.

There are other triable issues such as whether the loan is a secured loan under the loan agreement. Because the above issue is an adequate ground and entitles the Applicant to defend the suit, the Applicant may raise any other grounds of defence he deems plausible in the defence and there is no need for me to consider them here.  In other words the question of whether interest of 120% per annum can be lawfully charged is sufficient for purposes of raising a triable issue and a plausible defence to the claim of Uganda shillings 53,070,000/= on the ground of illegality.

Lastly the Applicant’s application is uncontested and the facts averred by the Applicant in support of the application which has been reproduced at the beginning of this ruling are deemed to be admitted facts for purposes of this Application.

In the premises the Applicant's application succeeds and the Applicant is granted unconditional leave to defend the action of the Plaintiff/Respondent. The Applicant shall file a defence to the Plaintiff’s claim within 14 days from the date of this order. Costs of the application are costs in the cause.

Ruling delivered in open court 14 October 2014.

 

Christopher Madrama Izama

Judge

Ruling delivered in the presence of:

Odokel Opolot for the Respondent

Bemanyisa Adonijah for the applicant

Applicant in court

Charles Okuni: Court Clerk

 

Christopher Madrama Izama

Judge

14/10/2014