Court name
Commercial Court of Uganda
Judgment date
25 March 2014

Enscon Ltd v Cable Corporation Ltd (Miscellaneous Application-2013/756) [2014] UGCommC 28 (25 March 2014);

Cite this case
[2014] UGCommC 28

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA

 AT KAMPALA

(COMMERCIAL DIVISIO)

MISC. APPLICATION 756/2013

(FROM CIVIL SUIT 469/2013)

ENSCON LTD --------------------------------------------------- APPLICANT/DEFENDANT

VS

CABLE CORPORATION LTD----------------------------------RESPONDENT/PLAINTIFF

 

BEFORE: JUSTICE FLAVIA SENOGA ANGLIN

RULING

By this application, the applicant sought unconditional leave to appear and defend civil suit 469/2013.

In the main suit, the Respondent /Plaintiff seek to recover shs. 126,754, 217/- , stated to be the unpaid sum for cables supplied to the Applicant/Defendant. The total cost of the cables was shs. The Respondent also claims interest and costs of the suit.

The Applicant is alleged to have issued cheques that bounced and to only have paid shs.32, 000,000/- so far.

In this application and the supporting affidavit, the Applicant admits that the core cables were supplied but contends that payments have been made as scheduled.

It is the Applicants further contention that the Respondent never served them with the notice of dishonour. The amount claimed is also disputed, and it is contended that the rate of interest applied for is high and unconscionable; thereby raising triable issues for which leave to appear and defend ought to be granted.

The contents of the application and of the supporting affidavit were wholly adopted by Counsel for the Applicant at the hearing. And he submitted that the Applicant had raised triable issues that amount to a defence, and the application ought to be allowed therefore. He cited in support the case of Miter Ltd Investments Ltd Vs E.A Portland Cement Co Ltd in; where the case of Interglobal Agencies Ltd Vs Bank of Uganda  [1985] HCB 65 was relied upon.

Counsel argued that the cheques referred to by the Respondent were meant to furnish security for payment and ought not to have been banked. And that the Respondent ought o have informed the Applicant when the cheques were dishonoured.

That since the amount owed is disputed triable issues are raised as to the amount owed to the Respondent and whether failure to issue notice of dishonour discharges the Applicant’s obligation towards payment of the said cheques.

The application was opposed by Counsel for the Respondent, who asserted that the test in cases of this nature is “whether the Applicant’s affidavit and application raise triable issues for determination by court at a later stage”. He relied upon the case of Begumisa George Vs East African Development Bank Misc. Application 415/2010; where the case of Zola & Another [1969] EA 691 was referred to.

Counsel pointed out that in the present case, the Applicant admits in the supporting affidavit that they owe some money to the Respondent. The only dispute is the amount outstanding. However, that there is no evidence of any payments having been made as none is attached to the Application.  And that without such particulars, the contention that the amount owed is disputed is not sufficient and does not amount to a triable issue.

Also that there is no evidence of compliance with the payment schedule/. Annexture A to the affidavit in reply indicates that the payments were supposed to be made by 20.07.13; which was not done.

The Respondent admits that shs. 32,000,000/- was paid by the Applicant, and that the balance of shs. 126,754, 217/- , plus interest remains unpaid; but that the Applicant does not indicate how the amount is disputed.

Submitting that no honest defence has been disclosed by the Applicant, more so as no proposed defence was attached, Counsel reiterated that no triable issues had been disclosed and that court cannot decide without the proposed defence. The case of Stella Banya Vs Hajji Abdu Migadde, Misc. Application 329/2006 P.2 and S. 39 of the Judicature Act were cited in support of the argument.

 The case of Begumisa (supra) and Maluku Interglobal Trade Agency (supra) were relied upon to confirm that “a proposed defence should have particularity.” Adding that, in the present case; the purported is mere averments without particulars as required by the law. And that therefore, the test established by decided cases had not been met.

It was also Counsel’s assertion that, failure to give notices of dishonour does not amount to a triable issue. The Applicant does not dispute the indebtedness and the cheques were issued in 2012 after the supply of cables. He argued that the bounced cheques are not in issue as they were overtaken by the payment schedule of 01.03.13; and the Applicant was already aware that the cheques were dishonoured.

In the alternative, Counsel stated that the cheques were never issued as security but as payment for goods supplied and the Respondent had a right to cash them as they were issued unconditionally. The cases of Sembule Investments Ltd Vs Uganda Baati, Misc. Application 664/2009 and Dembe Trading Enterprises Vs Bidco (U) Ltd JJA HCMA 28/2000; were cited to fortify the argument.

Further that, the issue of cheques could not defeat consideration due to the Respondent. The same argument was dismissed in the case of Peter Babigamba Vs Fulgence Mungereza Misc. Application 103/12; as a non triable issue.

On the issue of interest, Counsel argued that, interest at the rate of 2% cannot be said to be unconscionable when it was contractual as indicated by the tax invoices to the plaint. The case of Roko Construction Co Ltd Vs Attorney General HCCS 517/2005; was relied upon to support the argument.

Contending that the amount claimed is based on an undertaking to pay- Annexture A to the plaint; Counsel prayed for dismissal of the application with costs and that judgment should be entered for the sum claimed.

The issue for court to determine is whether this is a proper case for grant of leave to appear and defend:

Having carefully listened to the submissions of both Counsel and also taking into consideration the cases relied upon by each of them in support of their arguments, I find that it is clear that “before an application for leave to appear and defend is granted, it is incumbent upon the applicant to show and convince court by way of affidavit or otherwise; that there is a triable issue of fact or law which the court ought to determine between the parties to the suit”.

At this stage, decided cases have acknowledged;” the applicant does not have to convince court that there is a good defence on the merits and court should not inquire into the merits or demerits of the applicants defence”.

Nevertheless, for court to be able to determine whether any triable issues have been raised, the Applicant is required “as a matter of practice; to attach the proposed defence to the application”. See the case of Stella Banya Vs Hajji Abdu Migadde (supra), where Justice Kasule relied upon the case of Mukoome Agencies Vs UCB [1982] HCB 22, interalia.

In the present case, like in Banya’s case, the Applicant omitted to attach the proposed defence to the application; thereby failing to satisfy the requirement that “a proposed defence ought to be stated with sufficient particularity to appear genuine”.

Secondly, the Applicant does not deny owing the Respondent money. It is only stated that payments have been made as agreed. The sum alleged to have been paid to the Respondent so far, was not stated. This leaves the Respondent’s admission that only shs. 32,000,000/- has so far been paid unchallenged.

The payment schedule was put in place after the Applicant default in payment and the issuing of the bounced cheques. This lends credence to the argument of Counsel for the Respondent that the issue of bounced cheques does not arise. The claim is not based o the bounced cheques. The issue of not issuing notice of dishonour does therefore not arise and does not amount to a triable issue.

It follows that the Applicants contention that the failure to issue notice   discharged the Applicants obligation towards the cheques and the consideration for which they were issued cannot be sustained. It would be outrageous to hold that such failure discharged the Applicants obligation to pay.

Considering the schedule of agreed payment, coupled the sum the Respondent admits the Applicant has so far paid; and without any particulars from the Applicant to show what they claim to have paid is   more than the sum acknowledged by the Respondent, I find that no triable has been disclosed by the Applicant.

I also find that, the case of Miter Investments(supra) relied upon by Counsel for the Applicant is not applicable to the circumstances of the present case. In that case, bonafide questions of fact were raised. An audit had been sought and some of the cheques issued to the Respondent had not been cashed.  It is not the same in the present case.

The only outstanding issue is the rate of interest. In the plaint the Respondent claimed interest on the decretal sum at the rate of 25% from the date of judgment until payment in full.  But at the hearing, Counsel for the Respondent claimed interest at the rate of two and a half percent from the date of filing. This rate was also indicated in the demand note issued to the Applicant.

It cannot be determined on the basis of affidavit evidence which of the two rates is applicable. Court will have to hear parties on this issue. Conditional leave to appear and defend on that issue alone is granted under O. 36 rule 10.

Judgment is entered for the Respondent in the sum of shs. 126,754,217/-. The Applicant is directed to deposit the said sum of money in court before the issue of interest is determined.

Costs will abide the outcome on the issue of interest.

 

 

FLAVIA SENOGA ANGLIN

JUDGE

25.03.14