Court name
Commercial Court of Uganda
Case number
Miscellaneous Application 482 of 2014
Judgment date
22 January 2015

Marsene (Uganda) Ltd and 2 Ors v Stanbic Bank (U) Ltd (Miscellaneous Application 482 of 2014) [2015] UGCommC 14 (22 January 2015);

Cite this case
[2015] UGCommC 14






















This application was brought under S.98 C.P.A, 0.36 rr 3 and 4 and 0.52 rr 1 and 2 C.P.R seeking orders dismissing the main suit with costs or in the alternative that the Applicants be granted leave to appear and defend the suit.  Costs of the application were also applied for.


The grounds for the application are that:-


  1. The suit against the Applicants is premature, misconceived and bad in law and an abuse of court process.


  1. The Applicants are not indebted to the Respondent in the sum claimed in the Plaint.


  1. The sum claimed in the plaint is not yet due to the Respondent.


  1. The contract / finance lease facility upon which the Respondent bases its claim is still subsisting.


  1. The Applicants have a good and plausible defence to the claim, and


  1. It is only just, fair, and equitable that the Applicants be granted leave to defend the suit.


The application was supported by the affidavits of the Second and Third Applicants read and relied upon at the hearing.


There is also an affidavit in reply deponed by Francis Nuwagaba, where it is contended that the First Applicant is truly indebted to the Respondent having obtained an overdraft facility and failed to honor its obligations, that the grant of the application would only serve to deny the Respondent the right to recover its money, and that application should be dismissed with costs.


The background to the matter is that the First Applicant and the Respondent entered into a finance lease facility equivalent to USD 210,072.80 and an Insurance premium facility of Ug. Shs. 20,000,000/-     - See Letter of offer of 13.05.11.


The facility was for a period of five years at an agreed interest rate of 21.5% per annum.  The facility was secured by the leased assets, original documents for value addition machinery already purchased by First Applicant, irrevocable letter of undertaking from the approved insurer to refund any unused portion of the premium…, personal guarantees of the Second and Third Applicants for Ug. Shs. 539,174,720/- over property comprised in Plot 247, Block 1, Adokot, Kancho, Pallisa registered in the names of the First Applicant.


The rental payable was to be paid in sixty equal monthly installments, plus interest, with a penalty of 5% on the amount due and owing.  Any event of default in making payment of the installments would make the full amount of the finance lease facility, interest and other charges became due and payable.  The loan was advanced on 04.04.13.


The First Applicant failed to pay the agreed installments promptly and transferred the leased equipment to another location without the consent of the Respondent.  The Respondent accordingly filed the summary suit seeking to recover shs. 1,639,569,892/-, with interest at 21.5% per annum from 08.04.14, and penalty of 5% from the same date together with costs of the suit; hence this application by the Applicants.


The issue is whether unconditional leave to appear and defend should be granted.


Decided cases have established that for unconditional leave to appear and defend to be granted “the applicant must show that they have a good defence on the merits; or that a difficult point of law is involved; or that there is a dispute which ought to be tried, or a real dispute as to the amount claimed which requires taking an account to determine or any other circumstances showing reasonable grounds of a bonafide defence.” – See Bhaker Kotecha vs. Adam Muhammed CACA 48/2001 [2002] IEA 112 where the case of Saw vs. Hakim 5TLR 72, and Ray vs. Barker 4 EXD 1 279 were referred to.


As already indicated, there are affidavits sworn by both parties, each disputing the claim of the other. 


The Applicant disputes the amount claimed by the Respondent contending that upon receipt of demand notice of accrued arrears, some money was paid on 06.03.14 to the Respondent.  The transfer of the or giving a third party rights over the leased equipment was explained and that the Respondents did not take any further action thereafter.


The Applicant continues to use the equipment, pay installments, fees and surcharges – as per Bank statement Annexture E.


That Respondent waived any breach if any, since it allowed Applicants to continue using the equipment and that the amount demanded is not liquidated as it consists of future repayments spread over remaining period of the finance lease facility.


It is trite law that court is required to investigate those allegations and decide whether leave should be given.  Cases have established that “even if it is a single defence identified or found to be bonafide, the principle is that unconditional leave should be granted”. – See Corporate Insurance Co. Ltd vs. Nyali Beach Hotel Ltd [1995 – 1998] EA7.


The affidavit in support of the application shows that some payments were made towards the settlement of the loan.  Also that the Applicants had several loan accounts with the Respondent.  Different figures of the amounts remaining outstanding are indicated on each loan account.


Some deposits are not reflected in the Annextures relied upon by the Respondent.


There are also issues raised regarding removal of the loan assets from the agreed place to another place and the failure of the Respondent to repossess them – as to whether this was in compliance with the terms of the offer.


However, court is not required at this stage to determine the merits of the suit.  “The purpose of the application is not to prove the Applicants’ defence to the suit, but to ask for an opportunity to prove it through a trial.  What court has to determine is whether the Defendant has shown good case to be given leave to defend…. What courts have consistently held to amount to good a case is evidence that the Defendant has triable issues to the suit”. Geoffrey Gatete and Angella Maria Nakigonya vs. William Kyobe SCCA 07/2005 Mulenga JSC.


The issues outlined above concerning the actual amount due and payable to the Plaintiff are triable issues and the Applicant ought to be given a chance to adduce evidence in respect of those issues. - As per the case of Bhasker Kotecha vs. Adam Mohammed (Supra)“where there is a real dispute as to the amount claimed which requires taking an audit to determine, the unconditional leave to appear and defend the summary suit has to be granted”


All the issues raised by Applicant can only be properly and effectively determined if evidence is heard from both parties.


As to whether the Respondent’s suit against the Second and Third Applicants is premature, will also be determined at the hearing of the main suit – after the Applicants has adduced evidence and the contract looked as a whole.


The application is accordingly allowed for all the reasons set out therein.  Leave to file a defence is granted to the Applicants.


The defence to be filed within ten (10) days from the date of this ruling.


Costs will abide the outcome of the suit.