Court name
Commercial Court of Uganda
Judgment date
11 June 2015

Uganda Red Cross v Kangaroo (u) Ltd (Miscellaneous Application-2014/919) [2015] UGCommC 124 (11 June 2015);

Cite this case
[2015] UGCommC 124

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

[COMMERCIAL DIVISION]

MISCELLANEOUS APPLICATION No. 919 OF 2014

(Arising Out Of Civil Suit No. 680 of 2014)

     UGANDA RED CROSS :::::::::::::::::::::::::::::::::::::::::::: APPLICANT

                                                             VERSUS

     KANGAROO (U) LIMITED ::::::::::::::::::::::::::::::::::::::::: RESPONDENT

 

BEFORE:   HON JUSTICE B.KAINAMURA

RULING

The applicants brought this application under the provisions of 0rder 36 rule 3 (1) & 4 and Order 52 rule 1, 2 & 3 of the CPR and section 98 of the CPA Cap 71. The applicant seeks orders for unconditional leave to appear and defend Civil Suit No. 680 of 2014 now pending in this court and that costs of the application be in the cause.

The application was supported by the affidavit of the applicant’s Interim Secretary General; Kenneth Odur Gabelle.

The respondent filed an affidavit to oppose the application deponed to by Benson Kazoora the Managing Director of the respondent. 

In the summary suit, the respondent claims the sum of UGX 553,968,200/= arising from breach of contract which sum was reduced to UGX 337,427,200/= upon part payment by the applicant of UGX 176,541,000/= after the suit had been filed.

The brief grounds as set out in the Notice of Motion are that; the applicant experienced serious mismanagement by the previous administration which led to the suspension of payments by the Central Governing Board until completion of the verification process in respect of every contract, the new management of the applicant is unable to confirm that it is truly indebted to the respondent and it is in the interest of justice that the suit be heard on its merits.

The grounds upon which the application is based are set out in the affidavit of Kenneth Odur Gabelle the Secretary General of the applicant and are that;

The applicant has a meritorious defence to the whole claim.

The applicant has been seriously mismanaged by the previous management who entered into numerous fraudulent and fictitious transactions with third parties in and outside Uganda.

The fraudulent practices came to the attention of various government agencies which raised issue with the Central Governing Board of the applicant.

The result of the initial investigations led to the disbanding of the previous management and appointing of an interim executive and board to investigate the past fraudulent practices.

As a measure to safeguard the applicant and prevent further loss through payment of fictitious claims, it was directed that all claims must undergo a verification process prior to payment.

The applicant’s ability and willingness to pay the respondent’s claim is wholly contingent on the results of the verification process.

The applicant is willing to settle the matter of payment amicably and expeditiously with the respondent once the sum is verified.

It is in the interest of justice that the applicant be granted leave to appear and defend the suit.

The respondent filed an affidavit in reply in which Benson Kazoora the Managing Director of the respondent deposed that;

The averments made in paragraphs 5, 6, 7 and 8 of the affidavit in support of the application pertain to matters of internal management of the applicant and the respondent cannot be affected by any irregularities arising therein.

It was upon the local purchase orders that the respondent supplied various goods to the applicant and acknowledgements of delivery were issued in respect of the same.

The applicant has not refuted and / or denied its indebtedness to the respondent in the affidavit in support of the application.

The applicant has since the filing of Civil Suit No. 680 of 2014 made part payment to the respondent in respect of the claim of the respondent which stood at UGX 553,968,200/= as at 30th September 2014 and to date, the applicant is indebted to the respondent to the respondent in the sum of UGX 337,427,200/=.

The applicant’s purported defence cannot stand by the aforesaid part payment to the respondent.

The application does not raise any triable issues for determination by this court and ought to be struck out.

In rejoinder, Mr. Robert Kwesiga the newly appointed Secretary General deposed that;

Further to the information stated there was a further restructuring of the applicant’s management structure that led to the retrenchment of the entire top management of the organization.

He has recently been appointed to the office of Secretary General commencing his duties in the month of March 2015 and the new Central Governing Board of the applicant was similarly elected on 6th March 2015.

The applicant through its Accounts Officer Ernest Kaddu has been in periodic contact with Benson Kazoora in a bid to resolve the impasse in relation to the payments alleged to be due to the respondent.

The applicant was able to verify and reconcile part of the claims of the respondent and made the respective payments;

UGX 52,650,000/= as payment for the supply and delivery of printed branded items.

UGX 81,751,000/= as payment for the supply and delivery of assorted printed materials.

UGX 42,140,000/= as payment for printed and branded items.

The applicant has made it clear to the respondent that it is through the verification process that it is able to confirm its indebtedness to the respondent.

The fact that the applicant has made payment of UGX 176,541,000/= to the respondent through the verification process is proof of its commitment to resolution of this matter amicably and in a manner that validates and preserves the good business relationship of the parties.

The applicant’s ability and willingness to pay the respondent’s claim is wholly contingent on the results of the verification process.

It is in the interest of justice that that the applicant is granted leave to appear and defend.

Applicant’s submissions

Counsel for the applicant submitted that the principles governing applications of this nature are well settled. He stated that it is incumbent upon the applicant to show and convince court that there is a triable issue or arguable point of fact or law which court ought to determine between the parties to the suit. He also argued that leave to appear and defend will not be given merely because there are several allegations of fact or law in the applicant’s affidavit. The applicant must satisfy court that the allegations raised amount to a plausible defence. He argued further that the that applicant contends that the facts in dispute give rise to one principle triable issue; whether all the printed and branded materials alleged to have been supplied as per the contract documentation were in actual fact delivered and not fictitious claims of the respondent, i.e. whether there was actual supply.  Regarding the issue of actual supply, Counsel argued that as already averred in the affidavit, there was mismanagement in the applicant organization to the extent that the applicant was implicated in fraudulent dealings. This included various claims many of which were found to be fictitious. Counsel emphasized that the question of supply is so much of an issue between the parties and in the very circumstance this avails sufficient ground as a triable issue for the applicant to be granted leave to appear and defend the suit. He therefore prayed that court grants the application with costs in the cause.

Respondent’s submissions

Relying on a number of authorities such as Abubaker Kato Kasule Vs Tomson Muhwezi [1992-93] HCB 212, Counsel for the respondent submitted that before leave to appear and defend is granted court must establish that there is a plausible defence and ascertain that there is a real issue to be tried which it is not a sham. He added that the respondent’s Managing Director in his affidavit in support of the summary suit stated that the applicant issued Local Purchase Orders in the years 2013 and 2014 duly executed by the officials of the applicant. He further stated that it was against those orders that the respondent supplied various goods to the applicant and acknowledgements of delivery were given on each occasion. Counsel submitted that the applicant failed and or refused to pay the respondent who filed a summary suit against the applicant. The applicant since the filing of the suit has made payment of UGX 176,541,000/= leaving a balance of UGX 377,427,200/=. It was Counsel’s submission that the application is a ploy to buy time at the expense of the respondent’s clearly valid claim. He submitted that there is nothing for court to resolve as an issue. It was Counsel’s submission that the part payment of the sum UGX 176,541,000/= is prima facie evidence of admission of liability and the same should be construed in favor of the respondent.

Counsel submitted that the grounds raised by Counsel for the applicant do not constitute a reasonable defence nor do they raise triable issues. He invited Court to strike out the application for abuse of court process. He prayed for a summary judgment in the sum of UGX 377,427,200/= and costs of the application and the main suit.

Ruling

The application was brought under Order 36 rule 3(1) and 4 of the CPR. The claim is for UGX 377,427,200/= a balance outstanding from a supply of items as indicated in Local Purchase Orders and delivered to the applicant.

The principles to be applied by court in considering an application for leave to appear and defend a summary suit are now well settled.

In the case of Maluku Interglobal Trade Agency Vs Bank of Uganda [1985] HCB 63 J Odoki (as he then was) held that;

“Before leave to appear and defend is granted, the defendant must show by affidavit or otherwise that there is a bonafide triable issue of fact or law. When there is a reasonable ground of defence to the claim the plaintiff is not entitled to a summary judgment. The defendant is not bound to show a good defence on the merits but should satisfy court that there was an issue or question in dispute which ought to be tried and court should not enter upon the trial of the issues disclosed at this stage.”

The applicant contends that there is one triable issue which is; whether there was actual supply.

The respondent in reply contends that there is no bonafide triable issue that court needs to inquire into but the applicant is using it to buy time.

It is my considered opinion that the applicant has failed to satisfy court that there is an issue that ought to be tried to warrant the grant of leave to appear and defend. I note that after filing of the suit for the sum of UGX 553,968,200/=, the applicant went ahead and paid the respondent UGX 176,541,000/= leaving a balance of UGX 377,427,200/=.  This alone shows that the applicant did not deny being indebted. 

That being the case, I then wonder why it is at this point that the applicant questions whether there was actual supply when it already made part payment.

In the case of Corporate Insurance Co. Ltd Vs Nyali Beach Hotel Ltd [1995-1998] E.A 7, the Court of Appeal of Kenya held that leave to defend will not be given merely because there are several allegations of fact or law made in the defendant’s affidavit. In my view what the applicant has raised as reasons for grant of leave are, but mere allegations.

Therefore the applicant has not demonstrated any reasonable ground of defence to the claim. Consequently this application is dismissed with costs.

 Accordingly the plaintiff is entitled to summary judgment in Civil Suit No. 680 of 2014.

In the result, judgment is hereby entered for the plaintiff for the sum of UGX 377,427,200/= (Uganda shillings Three hundred Seventy Seven million Four Hundred Twenty Seven Thousand Two hundred Shillings only) with Costs for this application and the suit.

 

 

 

B.Kainamura

Judge

18.06.2015