Court name
Commercial Court of Uganda
Judgment date
28 November 2014

Isse Shekhnor Roble & Anor v M.M.M Agro Dealers Ltd (Miscellaneous Application-2014/514) [2014] UGCommC 163 (28 November 2014);

Cite this case
[2014] UGCommC 163

THE REPUBLIC OF UGANDA,

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISCELLANEOUS APPLICATION NO 514 OF 2014

(ARISING FROM CIVIL SUIT NO 361 OF 2014)

  1. ISSE SHEKHNOR ROBLE}
  2. SHEIK HUSSEIN MOHAMUD JIMALE}.......................................APPLICANTS

VS

M.M.M AGRO DEALERS LTD}......................................................RESPONDENT

BEFORE HON. MR. JUSTICE CHRISTOPHER MADRAMA IZAMA

RULING

The Applicant filed this application under Order 36 rule 4 of the Civil Procedure Rules and section 98 of the Civil Procedure Act for leave to defend the summary suit and for costs of the application to be provided for.

The application is supported by the affidavit of the first Applicant Isse Sheiknor Roble and the grounds in the Notice of Motion are as follows.

On 11 June 2014 a man who did not identify himself found the Applicant at King Fahd Plaza whereupon he asked the Applicant to receive documents he had removed from his file. Secondly after leaving his office, he called his lawyers to come in immediately after an interval 10 min from the time the gentleman had left. Thirdly upon perusal of the court papers by his lawyers, he immediately was advised to go to the Chambers of the Respondent’s lawyers so that it should indicate the time and date upon which he received the summons. Fourthly when he reached the chambers at the towers, he met Counsel Charles Sserwanga who gave to him copies upon which he had signed and also indicated the date and time he had received the papers. Lastly that is just and equitable that his application as the first Defendant/Applicant and that of the second Defendant/Applicant for leave to appear and defend this suit is granted.

In the affidavit in support of the application the Applicant deposes that he is an adult male American citizen of sound mind and the first Applicant/first Defendant and director of BMS Trading Company Limited and affirmed the affidavit in that capacity. He had an opportunity to peruse the summary plaint and affidavit in support. At all material times and on January 2014, he approached the second Respondent to get him persons competent enough to supply his company with beans, maize flour and maize grains. The second Applicant identified several persons inclusive of Mr Mukasa Mugaga Mugagga trading as M.M.M Agro dealers. There was a contract to supply foodstuffs to another company of South Sudan under the Emergency Relief Arrangement and money was paid promptly to whoever supplied the Applicant’s Company. As well as the Plaintiff was recommended to the Applicant by the second Applicant/Defendant, the Applicant went ahead through his company BMS General Trading Company Limited and started purchasing foodstuff from the Plaintiff. Under the contract, no written agreement was executed with the Plaintiff for the period the parties dealt with each other save for payment vouchers which were issued by the Applicant as confirmation of amount of money paid to the Plaintiff attached as annexure "A".

Besides signing for the money himself Mr Mukasa Mudu Mugaga as an agent/director of the Plaintiff, money was at times sent to the Plaintiff through one Hassan who is also the Applicant’s transport manager. The Applicant asserts that the Plaintiffs brought the suit in bad faith as it contains a lot of false statements which among other things include the amount of money paid to the Plaintiff. The plaint avers that the Plaintiff was paid Uganda shillings 1,979,128,210/=, yet the contract sum paid to the Plaintiff was Uganda shillings 4,794,040,000/= according to the statement of transaction between the Plaintiff and the first Applicant annexure "B". In April 2014, the Applicant’s director approached the first Applicant and convinced him that he had ordered for maize and beans from different suppliers up to a sum of Uganda shillings 500,000,000/= and that he wanted to pay off some of those suppliers. The first Applicant gave the Plaintiff money in cash but the Plaintiff’s director failed to supply goods worth the amount of money paid and owes the first Applicant Uganda shillings 52,107,000/= which the Applicant intends to counterclaim against the Plaintiff/Respondent. The contract period lasted up to around 19th of May 2014 and during this time the prices of the commodities kept fluctuating and it is not true that the purchaser agreed to purchase maize at Uganda shillings 830 per kilogram. It is not true that the Plaintiff supplied produce worth Uganda shillings 165,000,000/= being the amount of money paid by the first Applicant to the Plaintiff was Uganda shillings 1,130,625,000/= for maize grain.

The Applicants are not indebted to the Plaintiff and no demand notice or intention to sue has ever been communicated to the Applicant apart from the court summons that was served on him. The deposition also supports the application of the second Applicant.

In reply the Respondent/Plaintiff Mr Mugagga Muddu deposes that he has read the application for leave to defend the summary suit and upon advice of his lawyers he asserts that it does not disclose any triable issues but explains how service of court process was made. There is no single ground given by the Applicant to support the application for leave to appear and defend other than explanation about what the Applicants and Counsel did after service of court process. Furthermore based on the advice of his lawyers the Respondent deposes that an Applicant for leave to appear and defend has to show and proof to court that there are triable issues and also attach a copy of his or her written statement of defence on the application. Finally he deposes that the contents of paragraph 7, 12, 13 and 14 of the affidavit in support of the application are false.

In rejoinder the Applicant deposes that his application for leave disclose this triable issues involved in paragraph 3 on the averment that the person who dealt with the Respondent is BMS General Trading Company Limited according to the payment invoices attached to the application.

In the affidavit in reply the Applicant disputed the amount claimed by the Respondent in its pleadings of Uganda shillings 1, 979,128,210/= and the balance of Uganda shillings 165,000,000/= as the whole amount was paid to Mugagga Muddu Mukasa as director of the Respondent and other payments made through Fronak Associates while others were paid directly to the Plaintiff/Respondent. The acts of the Respondent suing the Applicant’s for payment already made is done in bad faith and with the intention of causing financial loss to the Applicant which is a serious triable issue. Finally basing on the advice of his lawyers he deposes that the advice given to the Respondent by his advocates is misconceived and it is not mandatory for an application of this nature to be accompanied with intended draft written statement of defence. The accompaniment with the draft written statement of defence is an optional practice. Without prejudice the Applicant attached a copy of the draft written statement of defence.

The Applicant is represented by Messieurs Musika, Mugisha and Company Advocates while the Respondent is represented by Messieurs Sserwanga, Maiteki and Company Advocates.

Both Counsels addressed the court in written submissions.

Submissions of the Applicant’s Counsel:

The background to the application is that the Respondent/Plaintiff filed a summary suit at the commercial court claiming a sum of Uganda shillings 165,000,000/=. The basis of the claim is that the Plaintiff was contracted by the Applicants to supply maize grains amounting to 2,583,287 kg worth Uganda shillings 2,144,120,210/=. It is alleged that there was a contract between the parties. Under the alleged contract the Applicant Applicant/Defendant agreed to pay Uganda shillings 830 per kilogram of maize grains.

The Defendants/Applicants are not indebted to the Respondent/Plaintiff in their individual capacity but at all times the Plaintiff dealt with Messieurs B.M.S General Trading Company Limited in which the first Applicant is a director. The said company contracted the Respondent/Plaintiff to supply food stuff which included maize grain, maize flour and beans. There was no written contract between the parties and the documents used included payment vouchers confirming payments made by the first Applicant/Defendant on behalf of the company. The price for maize grain was not fixed at Uganda shillings 830 per kilogram as alleged by the Respondent and the prices kept fluctuating for the period between January to April 2014. Sometime in April 2014 the first Applicant advanced Uganda shillings 500,000,000/= on behalf of B.M.S Trading Company Limited on the basis of the promise that the Plaintiff had ordered for maize and beans supplies from different suppliers up to that amount. The Respondent did not supply food stuff worth Uganda shillings 500,000,000/= and owes the Applicant Uganda shillings 52,107,000/= which the Applicant intends to claim by way of a counterclaim.

Whether the Applicant's application raises a defence or triable issues?

The Applicants Counsel submits that there is controversy about whether the Plaintiff dealt with the first Applicant or with B.M.S General Trading Company Limited according to the payment vouchers and ledger attached to the application.

Secondly the Applicant disputes the amount of Uganda shillings 165,000,000/= claimed by the Respondent as balance of the total contract of Uganda shillings 1,979,128,210/=. The entire contract sum according to the Applicant is Uganda shillings 4,794,040,000/= only. Furthermore the Applicant paid Uganda shillings 2,130,625,000/= and not Uganda shillings 1 979,128,210/= as asserted by the Plaintiff. There is controversy about the price of maize grain per kilogram. The Applicant contends that commodity prices kept fluctuating in the market between January and April 2014.

The Applicant’s Counsel relies on two authorities namely Souza Figuerido & Co Ltd versus Moorings Hotel Co Ltd (1959) EA 426 and Maluku Interglobal Trade Agencies Ltd versus Bank of Uganda [1983) HCB 63. The principles are that the Defendant must show by affidavit that there is a bona fide triable issue. Where there is a bona fide triable issue of fact or law, the Defendant would be allowed to defend unconditionally. The Defendant is not bound at this stage to show a good defence on the merits but that there is an issue or question in dispute which the court ought to try by but the court should not try the issues in the application. Where there is a reasonable ground of defence, the Plaintiff is not entitled to summary judgment. The court ascertains whether there is a plausible defence or a sham defence.

In the premises the Applicant raises triable issues as set out above and has a plausible defence.

Submissions of the Respondent’s Counsel

In reply the Respondent’s Counsel contends that it is the Applicant who contracted the Respondent to supply food products which fact is admitted in paragraphs 3 and 4 of the affidavit of the first Applicant in support of the application.

The submission that the Applicant never dealt with the Respondents is without merit and a falsehood. It is the Applicant’s who contracted the Plaintiff and not BMS General Trading Company Limited.

Secondly the submission that there was no written contract to support the claim ought to fail because a contract can be either oral or written. Moreover the Applicants admit dealing with the Respondent in the supply and receipt of produce.

Whereas the Applicant’s dispute the price of maize grain per kilogram, they do not indicate the price per kilogram that they were supposed to pay. The logical conclusion is that the price per kilogram is Uganda shillings 830/=.

The Respondent admits that the Applicant has made some payments amounting to Uganda shillings 165,000,000/= to the Plaintiff. The mere averment that the Applicants are not indebted to the Plaintiff cannot be a triable issue. In the premises the application for leave to appear and defend does not disclose any triable issues but instead explains how service of court process was made on the Applicant/Defendant's.

The Applicant’s defence that it is not indebted to the Respondent is a sham defence in light of the fact that the Applicant admits dealing with the Respondent for the supply of maize grains and beans. Companies are represented by individuals and it is the Applicants who represented the Applicants. The counterclaim of Uganda shillings 52,107,000/= is without basis.

Under order 36 rules 4 of the Civil Procedure Rules, the Defendant is obliged to state whether the intended defence goes to the whole or part only of the claim. The alleged counterclaim is not supported by any documentary proof and ought to fail. Furthermore the Defendant never attached the intended defence and notice so far presented is a sham intended to prolong the trial for the benefit of the Applicants and to the disadvantage of the Respondent.

In the case of Gupta versus Continental Builders Ltd [1978] KLR at page 83 and particularly page 91 Madan J held that a triable issue must be set out in no uncertain terms. The Respondent’s Counsel further relies on the case of Peerani versus Hon (1921 – 1952) 1 T.L.R 467 for the proposition that the courts shall not listen to a Defendant who merely denies that he does not owe the money claimed. The authenticity of the denial must be ascertained. In the application and affidavit in support thereof there is no statement or averment that the Applicants have a good defence which is a mandatory requirement. In the case of Peerani versus Hon (1921 – 1952) 1 T.L.R 467 it was held that leave to appear and defend shall only be given to a Defendant who has averred by affidavit that he has a good defence and shows what that defence is. The submissions of the Applicant’s Counsel amount to submissions from the bar that the Applicant has a good defence and that there are triable issues which have not been supplied as required by the law and practice and therefore ought to fail.

In the case of Thssen Stahlunion export GmbH versus Kibo Wire industries Ltd [1973] LRT No. 54,217 at 220 it was held that if a statement of defence or affidavit filed in connection with an application for summary judgment discloses a triable issue which cannot be fairly determined from the affidavits filed, the application for summary judgment would be dismissed.

There is no single ground given by the Applicants to support the application for leave to appear and defend except the grounds are explanations about what the lawyers did after service of court process. For the above reasons the Respondent’s Counsel prays that the court declines to grant leave to the Applicant to defend the suit under Order 36 rule 5 of the Civil Procedure Rules and that judgment is entered for the Respondent as prayed in the plaint.

In rejoinder the Applicant reiterated earlier submissions that triable issues are disclosed. As far as the issue of a written contract is concerned, the Respondent supports the Applicant’s contention that there was no written contract. However this submission is contrary to the pleadings filed by the Respondent wherein the list of documents to be relied upon includes an agreement for supply of maize to the Defendants and a contract between the Plaintiff and the Defendants but none was annexed to the pleadings. The Applicant’s on their part attached payment vouchers and ledger sheets which corroborate the contention that it was not them but the company which transacted with the Respondent. Under section 10 (5) of the Contract Act 2010, a contract the subject matter of which exceeds 25 currency points shall be in writing. By the Respondent failing to attach any contract agreement in the pleadings or affidavit in reply to the application, there is no proof that there exists a contract between the parties. In the premises it is fair and just for this honourable court to grant the Applicant's application for leave to defend the suit.

Ruling

I have carefully considered the Applicant’s application together with the affidavit evidence with the documentary evidence attached to the affidavits, the pleadings in the summary suit and the submissions of Counsel as well as the authorities cited.

Order 36 rule 2 of the Civil Procedure Rules provides that where a Plaintiff seeks only to recover a debt or liquidated demand in money payable by the Defendant, with or without interest arising upon a contract, express or implied, he or she may at the option of the Plaintiff, institute a suit by presenting a plaint in the prescribed form accompanied by an affidavit made by the Plaintiff or by any other person who can swear positively to the facts, verifying the cause of action, the amount claimed, if any and stating that in his or her belief that there is no defence to the suit.

The purpose of the Order 36 which enables summary suits is expounded by Parker L.J  in the case of Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd (In Liquidation) [1989] 3 All ER 74. According to Parker LJ at page 77:

“The purpose of Ord 14 is to enable a Plaintiff to obtain a quick judgment where there is plainly no defence to the claim.”

Consequently it should be apparent from the face of the pleadings that there is no defence to the suit.

The facts of this suit are that the Respondent alleges in the summary suit that between January and April 2014 the Plaintiff was contracted by the Defendants to supply maize grain amounting to 2,583,287 kg. It is alleged that the terms of the contract between the parties was to pay Uganda shillings 830 per kilogram. The Defendants made part payment of Uganda shillings 1,179,128,210/= leaving a balance of Uganda shillings 165,000,000/= at the time of filing the suit. The Plaintiff includes a claim for interests and costs of the suit.

The affidavit in support sworn to by one Mugagga Muddu Mukasa deposes that he is a director of the Plaintiff. He confirms the facts pleaded in the plaint and further deposes that the Defendants promised to pay the balance of Uganda shillings 165,000,000/= within a period of two weeks from 9 April 2014. A demand for the Defendants to pay the said sum of Uganda shillings 165,000,000/= has been in vain despite several reminders to the Defendants who ignored to pay the monies due and owing. Finally he asserts that the Defendant has no possible defence to the suit.

On the other hand the Applicant in this application supports the application with the affidavit of the first Applicant. However the grounds of the application do not disclose any grounds for consideration in terms of triable issues or plausible defences as they relate to service of court process. That notwithstanding, this would be a procedural irregularity because the grounds are supposed to be averred in the notice of motion but were not. The notice of motion discloses no grounds but asserts that the application is supported by the affidavit of the first Applicant. Order 36 rule 4 of the Civil Procedure Rules provides that the application of the Defendant for leave to defend the suit shall be supported by affidavit which shall state whether the defence alleged goes to the whole or part only and if so to what part of the Plaintiffs claim and such a Defendant may be examined upon oath at the discretion of the court. Consequently the grounds for leave to defend this suit can be contained in the affidavit of the Applicant. Failure to disclose the grounds in the notice of motion itself is a matter of form since the intention of giving the grounds is to give notice to the court and the opposite side of any plausible defences or triable issues.

I have carefully perused the affidavit of the first Applicant. He deposes that he is a director of B.M.S General Trading Company Limited and approached the Respondent to get him competent persons to supply his company with the maize flour and maize grain. The second Applicant identified several persons who included Mr Mukasa Muddu Mugaga allegedly trading as M.M.M Agro Dealers Ltd, the Plaintiff in this suit. The matter relates to a contract to supply foodstuff to another company in South Sudan. Money was paid to whoever supplied the first Applicant’s company namely Messrs B.M.S General Trading Company Limited. As soon as the Plaintiff was recommended to the first Applicant by the second Applicant, the first Applicant through the company B.M.S General Trading Company Limited purchased the goods from the Plaintiff. There was no written agreement and the only evidence of the contract are payment vouchers attached as annexure "A". The payments are made by B.M.S General Trading Company Limited.

I have duly considered the payment vouchers and the statement which show that sometimes payment are made in cash and sometimes by way of a cheque. There are three categories of persons who were paid. Several payments were made to Mukasa Mudu Mugaga. A few payments were made to M.M.M Agro Dealers Ltd. Some payments were made to Messieurs Flonak Associates. In the statement attached as annexure "B" to the affidavit of the first Applicant the summary of payments indicated are the following payments namely:

  • Maize grain payments amounting to Uganda shillings 2,130,625,000/=.
  • Maize flour payments amounting to Uganda shillings 1, 522,808,000/=.
  • Red beans payments amounting to Uganda shillings 1,088,500,000/=.
  • The total amount paid is Uganda shillings 4,741,933,000/=.

The Plaintiff’s suit is in respect of maize grain payments. The summary suit was commenced by M.M.M Agro Dealers Ltd. All the documentation supplied by the first Defendant in the affidavit in support show that the other party dealing with the three suppliers who were paid in the vouchers is B.M.S General Trading Company Limited. The first Applicant asserts that all along he acted as a director of B.M.S General Trading Company Limited. On the other hand the Plaintiff does not attach any contract or document in support of the claim and the affidavit in support of the summary suit is deposed to by Mr Mudu Mugagga stated to be the director of the Plaintiff.

Under Order 36 rule 3 (1) of the Civil Procedure Rules, a Defendant cannot be heard in defence except after applying for and obtaining leave of court. An application is made under Order 36 rule 4 of the Civil Procedure Rules which provides that the application for leave shall be supported by an affidavit which shall state whether the defence alleged goes to the whole or part only and if so what part of the Plaintiff’s claim.

According to Odgers' Principles of Pleading and Practice in Civil Actions in the High Court of Justice 22nd edition at pages 75 and 76 whenever a genuine defence, either in fact or law, sufficiently appears, the Defendant is entitled to unconditional leave to defend. “The Defendant is not bound to show a good defence on the merits.”

“The court should be satisfied that there is an issue or question in dispute which ought to be tried or that there ought for some other reason to be a trial.” The defence should be made in good faith. The defence must be stated with sufficient particularity, as appear to be genuine.

The principle is quoted above from Odgers (Supra) are also echoed in several Ugandan precedents which include Maluku Interglobal Trade Agencies Ltd versus Bank of Uganda [1985] HCB 65; Tororo District Administration versus Andalalapo Industries HCM 8/2/1997 and Souza Figuerido & Co Ltd versus Moorings Hotel Co Ltd (1959) EA 426 .

From the Applicants pleadings there is a bona fide triable issue of fact and law relating to the proper parties to the alleged contract. Even though it is not averred as to whether the defence goes to the whole or part of the claim of the Plaintiff, this would be a question of form since the substance of the defence goes to the root of the suit and therefore is a complete defence to the entire suit.

The second triable issue goes to the controversy about the price of maize grain. Because no documentation was attached by the Plaintiff, there is no documentation about the price of the goods, there is no documentation about the demands allegedly made on the Applicants/Defendants and there is no evidence of a written contract. There are plainly assertions of fact in the plaint which are not supported by any documentary proof and which are rebutted by the affidavit in reply. Therefore the evidence of the Plaintiff is contested by the sworn affidavit of the Applicant. On the other hand the claim is also based on the bare sworn affidavit of the director of the Plaintiff.

From the above principles, a summary suit cannot be based on contested affidavit evidence which is not supported by other evidence. I agree with the principle for the grant of a temporary injunction that where there is contested affidavit evidence, the final conclusion on the controversy should await the trial of the suit on the merits. This was the holding of Lord Diplock in the case of American Cynamide Co. v Ethicon [1975] 1 ALL E.R. 504 at page Lord Diplock held and I quote:

My Lords, when an application for an interlocutory injunction to restrain a Defendant from doing acts alleged to be in violation of the Plaintiff’s legal right is made on contested facts, the decision whether or not to grant an interlocutory injunction has to be taken at a time when ex hypothesi the existence of the right or the violation of it, or both, is uncertain and will remain uncertain until final judgment is given in the action.”

At page 510:

“It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial.”

A summary suit cannot be decided on the basis of probabilities but there has to be some certainty about the liability of the Defendants. Similar to the principles for the grant of a temporary injunction, the court should not decide factual controversies or difficult questions of law summarily but await cross examination of witnesses and a full address on the matter before final decision. Order 36 rule 2 of the Civil Procedure Rules requires the Plaintiff to support the plaint with an affidavit of a person who can swear positively to the facts and who is able to say that in his or her belief that there is no defence to the suit.

Where such an affidavit has been rebutted by another affidavit supported by documentary evidence, the Plaintiff cannot be entitled to a summary judgment. The triable issues raised by the Defendants do not show a sham defence but plausible defences going to the root of the claim in the sense that if they succeed, they would absolve the Applicants of all liability.

In the premises the Applicant's application succeeds and the Applicants have unconditional leave to defend the summary suit. The Applicants will file a written statement of defence within 14 days from the date of this order. The costs of this application shall abide the final outcome of the suit.

Ruling delivered in open court the 28th day of November 2014

 

Christopher Madrama Izama

Judge

Ruling delivered in the presence of:

Sam Sserwanga Counsel for the Respondent

Counsel for the Applicant and the Applicant absent

Charles Okuni: Court Clerk

 

Christopher Madrama Izama

Judge

28/11/2014