Court name
Commercial Court of Uganda
Judgment date
24 June 2014

Waziri & 2 Ors v Opportunity Bank (U) Ltd (Miscellaneous Application-2013/599) [2014] UGCommC 84 (24 June 2014);

Cite this case
[2014] UGCommC 84

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL COURT DIVISION)

MISC. APPLICATION NO. 599 OF 2013

(Arising from Civil Suit No. 582 of 2012)

 

ELIAS WAZIRI & 2 OTHERS::::::::::::::::::::::::::::::::::::::::APPLICANTS

VERSUS

OPPORTUNITY BANK (U) LTD:::::::::::::::::::::::::::::::::::RESPONDENT

BEFORE HON. LADY JUSTICE HELLEN OBURA

RULING

This application was brought under Order 9 rules 12 and 27, Order 22 rules 23 and 26 of the Civil Procedures Rules (CPR) as well as section 98 of the Civil Procedures Act (CPA) seeking for orders that a default judgement or exparte judgment entered against the applicants in the above suit be set aside and the suit be heard inter-parties. The applicants also sought that costs of the application be provided for.

The salient grounds are first that the applicants were never served with any process as alleged. Secondly, that out of a sum of Shs. 550,000,000/= extended to them, the applicants paid off a sum of Shs. 512,000,000/= leaving an outstanding balance of Shs. 38,000,000/= and lastly, that there are triable issues that need to be determined inter-parties.

On the record is an affidavit in support of the application deposed by the first applicant. The respondent also filed an affidavit in reply deposed by its Company Secretary. When this application came up for hearing, the applicants were represented by Mr. Mugoya Kyawa and the respondent by Ms. Bishagenda Dorothy. Both counsel filed very inept submissions which did not assist this court much in determining this application.

Counsel for the applicants only made a one sentence submission that out of the total sum of Shs. 550,000,000/= advanced to the applicant by the respondent as a loan facility, a sum of UGX 512,000,000/= was unpaid to the respondent. I want to believe that counsel meant paid instead of unpaid because in the next one sentence paragraph he argued that as such the outstanding balance is UDX 38,000,000/= and not UDX 380,000,000/= as alleged by the respondent in its plaint. 

Interestingly, counsel for applicants did not address this Court on the grounds for setting aside the default/ex parte judgement that was entered against the applicants. The rest of the applicants’ submissions were on the preliminary objection raised by their counsel. He contended that the affidavit was filed out of time by four months contrary to Order 12 rule 3(2) of the CPR. The applicants also relied on the case of Stop & See (U) Ltd vs. Tropical Africa Bank Ltd HCMA 333 OF 2010 in which Madrama, J. interpreted Order 12 rule 3(2) of the CPR.

In reply, counsel for the respondent argued that Order 12 rule 3 of the CPR is not applicable since the main suit had already been disposed of. It was argued for the respondent that an order to set aside a default judgement is not an interlocutory order. Counsel for the respondent also argued that Order 12 rule 3(2) only applies where there has been alternative dispute resolution or scheduling conference which was not the case here since the applicants did not file a defence.

Without prejudice to the foregoing submission, the respondent’s counsel prayed that in the event Court finds that time had lapsed, court should invoke the provisions of Order 51 rule 6 of the CPR and enlarge time to allow for the affidavit in reply to stand.

I have carefully considered the submissions of both counsels. As to whether the affidavit in reply was filed within time, Order 12 rules 3 of the CPR provides timelines for filing, serving and hearing of interlocutory applications made after completion of the alternative dispute resolution (ADR) or where there has been no ADR, after the completion of the scheduling conference.

This application was filed on the 15th of July 2013. The applicants’ counsel claims to have served it on the respondent on the 23rd July 2013. The respondent has not disputed this claim and so I take it that the respondent was served on that date. It is also not in dispute that four months later, an affidavit in reply was filed on 20th November 2013. In the case of Stop & See (U) Ltd vs. Tropical Africa Bank Ltd (supra) that was relied upon by the applicants, Madrama J. held that Order 12 rule 3 sub rule 2 is meant to give the timelines for all interlocutory applications that are envisaged after the completion of the scheduling conference or ADR.  He also observed that the strict interpretation of the rule would imply that time has to be reckoned from the matters stated in rule 3 sub-rule 1 and this means that time runs from the date of completion of the ADR or to run from the completion of the scheduling conference.

However, in the instant case there has neither been a completion of the ADR which is the mandatory court annexed mediation nor has there been a scheduling conference because a default judgment was entered.  It is therefore my view that strictly speaking this application would not fall within the scope of rule 3 of order 12 of the CPR since it was filed after the main suit had been disposed of.

Nevertheless, that is not to suggest that time lines should not be strictly followed in an application like this one. I am persuaded by the dictum of Madrama J. in Stop & See (U) Ltd vs. Tropical Africa Bank Ltd (supra) who stated:

“These pleadings follow the same pattern as that of a plaint and a written statement of defence. It follows that the same time lines would apply to interlocutory applications. A reply or defence to an application has to be filed within 15 days. Failure to file within 15 days would put a defence or affidavit in reply out of the time prescribed by the rules. Once the party is out of time, he or she needs to seek the leave of court to file the defence or affidavit in reply outside the prescribed time.”

There is no doubt that the affidavit in reply in this case was filed way outside the fifteen days it should have been filed in an ordinary pleading. I also note the belated prayer for extension of the time within which to file the reply in the submissions of the respondent’s counsel. While it is true that Order 51 rule 6 of the CPR gives this Court power to enlarge the time for doing any act or taking any proceedings under the Rules, it is my considered view that the application should have been made before the affidavit was filed. Be that as it may, I will exercise my discretion and validate the affidavit in reply by extending the time at this stage for the interest of substantive justice to be served and it is accordingly done. Consequently, the preliminary objection is overruled.

Now as to whether there are valid grounds to set aside the judgement, the applicants’ counsel made no submission in that regard. However, it is averred in the affidavit in support that the applicants were never served with the court process and that the amount claimed by the respondents is false since they have paid Shs. 512,000,000/= and only owe Shs. 38,000,000/= which the first applicant stated he is willing and able to pay. In effect there are two grounds of this application as discerned from that submission, namely; (1) lack of service and (2) payment of substantial amount that was owed.

It is imperative to note that the allegation that the court process was not served on the applicants was only made in the notice of motion but there was no averment to that effect in the affidavit in support of the application. It was also never alluded to in the brief submissions of counsel for the applicants. On the other hand counsel for the respondent submitted that court process was served on the applicant by way of substituted service as per the affidavit of service.

Order 9 rule 12 of the CPR gives the High Court unfettered discretion to set aside or vary ex parte judgment. See Mbogo and Another v Shah [1968] EA 93 (CA), Nicholas Roussos v GulamHussein Habib Virani and Another SCCA No 9 of 1993, and Attorney General & Another v James Mark Kamoga & Another SCCA No. 8 of 2004.

Harris, J. in the case of Kimani v. McConnell (1966) E.A. 547 stated that in the exercise of discretion under r.l0 (our rule 12) one needs to consider whether in light of all the facts and circumstances both prior and subsequent of the respective merits of the parties, it would be just and reasonable to set aside or vary the judgment if necessary upon terms to be imposed.

That principle was followed by the Court of Appeal for East Africa in Mbogo v. Shah (Supra), and in Patel v. E.A. Cargo Handling Services (1974) E.A. where Duffus P. at page 76 said;

“I also agree with this broad statement of principle to be followed. The main concern of the court is to do justice to the parties and the court will not impose conditions on itself to fetter the wide discretion given to it by the rules.”

This court is fortified by the above principle as it exercises its discretion judicially to determine whether in light of the facts, circumstances and merits of the instant case it would be just and reasonable to set aside or vary the judgment. This application was brought under Order 9 rules 12 & 27 among other provisions cited therein. Order 9 rule 12 of the CPR gives this Court discretion to set aside or vary the judgment passed pursuant to any of the preceding rules of that order upon such terms as may be just. Similarly, order 9 rule 27 gives this Court discretion to set aside decree ex parte against the defendant upon the defendant satisfying the court that summons was not duly served or  he or she was prevented by sufficient cause from appearing when the suit was called on for hearing.  

 

As regards service of summons, I am inclined to agree with the respondent that service of the court process was effected on the applicants by way of substituted service as per an advertisement in the New Vision newspaper dated 4th April 2013,   annexture “C” to the affidavit in reply. I have also had the benefit of looking at the affidavit of service of the process server Mr. Tadeo Bbosa dated 4th February 2013 in which he stated that he first served the 1st applicant with summons at the applicants’ place of business but he refused to acknowledge receipt of the same stating that this would be done after conferring with his lawyers. This prompted the respondent to seek permission from Court to serve the summons through substituted service.

Order 5 rule 18 of the CPR provides that substituted service under an order of the Court shall be as effectual as if it had been made on the defendant personally. I therefore find that the applicants were duly served with summons by advertisement in the newspapers upon an Order of this Court and in the premises there is no merit on the first ground of this application.

 

The second ground of this application is that the applicants have paid off a sum of Shs. 512,000,000/= out of a total sum of Shs. 550,000,000/= extended to them, leaving an outstanding balance of Shs. 38,000,000/= which the applicants are ready and willing to pay.  In contrast, the respondent averred that the applicant was granted two loan facilities worth Ug. Shs. 550,000,000/= and Shs. 100,000,000/= as per annextures “A” and “B” to the affidavit in reply but the applicant has only paid Shs. 460,000,000/= after selling two of his properties. The respondent disputes the applicant’s averment that a sum of Shs. 70,000,000/= was paid to Mr. Herbert Kanyeihamba, the respondent’s Branch Manager Natete and denied ever receiving such money.

 

First of all, the applicants did not file an affidavit in rejoinder to dispute the averment in the affidavit in reply that they were lent additional Shs. 100,000,000/= as indicated in annexture “B” to the affidavit in reply. That affidavit evidence stands unchallenged and I am inclined to believe that it is the correct position. Secondly, I am not convinced by the applicant’s averment that he paid Shs. 70,000,000/= to Mr. Herbert Kanyeihamba in fulfillment of his loan obligations as there is no proof of that assertion. The applicants have not given any indication in the affidavit in support that there is proof of that payment. It is a cardinal principle of law that he who alleges must prove. The applicants could not have just handed that sum of money to the alleged recipient without an acknowledgment of receipt. I believe if there was such an acknowledgment the applicants would have attached it to the affidavit in support.

It is also noteworthy that the loan facility was to attract some interest which must have accrued to a substantial amount as at the time of filing the suit. It therefore follows that if the Shs. 460,000,000/= which is acknowledged as having been paid by the applicants is offset from the total of Shs. 650,000,000/= that was lent the balance on the principal would be Shs. 190,000,000/= without the interest which amount is more than the Shs. 38,000,000/= acknowledged by the applicants as being due and owing. It is therefore not true that the applicants have paid the loan and the only outstanding balance is Shs. 38,000,000/=.

In the circumstances, I find that the applicant has failed to satisfy this court that there are any valid grounds to set aside the default judgment and decree. In the result this application must fail and it is accordingly dismissed with costs.

I so order.

Dated this 24th day of June 2014.

 

Hellen Obura

JUDGE

Ruling delivered in chambers at 3.30 pm in the presence of Ms. Bishagenda Dorothy for the respondent whose Legal Officer Mr. Edgar Tibayeita was also present. The applicants and their counsel were absent.

 

JUDGE

24/06/14