Court name
Commercial Court of Uganda
Judgment date
21 January 2015

Vaselux International Ltd & 4 Ors v Bank Baroda(U )Ltd (Miscellaneous Application-2012/535) [2015] UGCommC 16 (21 January 2015);

Cite this case
[2015] UGCommC 16

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

 

MISC. APPLICATION NO. 535 OF 2012

(ARISING FROM CIVIL SUIT NO. 350 OF 2012)

 

  1. VASELUX INTERNATIONAL LIMITED
  2. SSEGAWOLE JACK KITYO
  3. MAKUBURE JOSEPH KITYO
  4. NJUBA PHILLIP COLLINS
  5. SSEBANJA JONATHAN  ................................. APPLICANTS

 

VERSUS

 

BANK OF BARODA (U) LIMITED .......................... RESPONDENT

 

 

BEFORE: LADY JUSTICE FLAVIA SENOGA ANGLIN

 

RULING

 

This application for leave to appear and defend H.C.C.S 350/2012 was brought under 0.36 rr 3 (1) and 4, 0.52 rr (1) and (3) C.P.R.  Costs of the application were also applied for.

The application was supported by the affidavit of the Second Applicant, which was read and relied upon at the hearing.

There is an affidavit in reply sworn by S.K. Singh. 

The brief facts of the case are that in March 2010, the First Applicant and the Respondent entered into a loan agreement for the sum of Ug Shs. 200,000,000/- with interest at the rate of 21% per annum.  The loan was secured by a mortgage on the property comprised in Kyadondo Block 98, Plot 74, land at Katinvuma, registered in the names of the Second Applicant.  The Second to Fifth Applicants executed a joint personal guarantee in favor of the Respondent in respect of the said sum and interest therein.  The loan was disbursed on 30.03.10 and 11.05.2010 respectively to the First Applicant.  The installments payable per month was Shs. 7,854,726/- with effect from May, 2010, on both principal and interest.

On 30.07.12, the Respondent recalled the loan for failure by the First Applicant to pay the installments as agreed.  The loan not having been repaid, the Respondent filed a suit against the Applicants under summary procedure seeking judgment against the Applicants jointly and severally for Shs. 219,575,341/- together with interest at 21% per annum from 30.07.12 till payment in full and costs of the suit, hence this application for leave to appear and defend suit.

The grounds of the application and the supporting affidavits briefly are that the loan was secured by a legal mortgage, the First Applicant was servicing the loan and that the Applicants are not indebted to the Respondent in the amount claimed.

Secondly that the suit against the Second – Fifth Applicants is premature as the loan was secured and the application raises triable issues.

The Respondent in opposing the application contended that demands for payment of the outstanding sum were made but the Applicants did not heed.  And when the Respondent tried to recover the loan by disposing of the mortgaged property, the sale was stopped by one Florence Nassail vide HCMA 701/2012.

The Applicant has since the filing of the suit paid part of the loan to the tune of Ug Shs. 84,000,000/-.  The suit is accordingly not premature and there are no triable issues raised by the Applicant.

Both Counsel filed written submissions where Counsel for the Respondent raised a number of preliminary objections.  Court will deal with the preliminary objections first:-

Counsel for the Respondent contended that the affidavit in support of the application is incurably defective and therefore cannot support the application.  He referred to paragraph 6 thereof alleging that the deponent purports to swear matters on his behalf and on behalf of the Third to Fifth Applicants.  He argued that there was no written authority from those Applicants authorizing the Second Applicant to plead or act for them in the pleadings.  That this was contrary to 0.1 r 12 (1) C.P.R.  The case of Nakalema Binaisa and 3 Others vs. Mucunguzi Myer MA 460/13 was relied upon plus the case of Mukuye and 106 Others vs. Madhvani Ltd HC MA 821/13 (From CS. 615/2012) – where an affidavit was held to  be defective by reason of being sworn on behalf of another without authority from that other person.

Counsel for the Applicants did not respond to the objection as there is no affidavit in rejoinder.

Looking at the impugned paragraph 6 of the supporting affidavit, there is no where it is stated that the affidavit is sworn on behalf of the Third – Fifth Applicant.

0.1 r 12 (1) and (2) C.P.R does not apply to the circumstances of the present case and neither to the authorities relied upon by Counsel or the Respondent.

The affidavit is not defective as the deponent was deponing to facts within his own knowledge and had been sued jointly and severally with others.

 

The objection is over ruled for those reasons.

 

It was also the contention of Counsel for the Respondent that the application by Third to Fifth Applicant is not supported by an affidavit sworn by any of them and therefore judgment ought to be entered against them.

 

  • The Applicants having been sued jointly and severally, any of them could swear an affidavit in support of the application.  It was not necessary for each one of them to swear a separate affidavit as it’s evident that they were joint guarantors.  It would be an unnecessary repetition if each one of them were to swear an affidavit.

 

That objection is also over ruled.

 

The real issue for court to determine is whether the Applicants should be granted leave to appear and defend the suit.

 

It was submitted by Counsel for the Applicants that for leave to appear and defend to be granted, the Applicants have to prove that there is a bonafide triable issue and a reasonable ground for defence, in which case the Respondent is not entitled to a summary judgment.

 

The case of William Sebuliba Kayongo and Another vs. Barclays Bank of Uganda HC MA 325/08 was cited in support.

 

Adding that “summary procedure is intended to enable a plaintiff with a liquidated claim to which there is clearly no good defence, to obtain quick summary judgment”

 

Counsel asserted that the Applicants in the present application could meet the tests because they have raised triable issues regarding the indebtedness of the First Applicant and the collateral nature of personal guarantees.

 

Counsel for the Respondent agreed that any defendant who has a good defence to the suit ought to be permitted to appear and defend the suit otherwise the Plaintiff is entitled to a decree.

 

The cases of Begumisa George vs. East African Development Bank HC MA 451/2010 and Paul Kasagga and Another vs. Barclays Bank of Uganda Ltd HCMA 113/2008 were cited in support.

 

Counsel then argued that the Applicants make mere denials of indebtedness in the supporting affidavit and misrepresent facts about the amount disbursed to the First Applicant, which is evidence that they have no credible defence.

 

Further that as indicated in the affidavit in reply, the First Applicant has since settled part of the amount claimed by payment of Ug. Shs.84,000,000/- which sum was paid since the suit was filed – Referred to Annextures BOB1, BOB2 and BOB3.

 

0.36 r 4 C.P.R requires an application for leave to defend to be supported by affidavit that ought to state whether the defence goes to the whole or part only of the claim, and if so, to what part of the Plaintiff’s claim.

 

In the present case, the Applicants under grounds IV, VI and VII of the application and paragraphs 5, 7 and 8 of the affidavit in support raise issues regarding servicing the loan and the amounts claimed.

 

Looking at the Annextures to the plaint – there is variance in the amount alleged to have been outstanding at the time the loan is said to have been reached – See Annextures  BOB3 and BOB2. And the balance that remained un paid by 30.03.12 is also at variance.

 

The Applicants contend that they owe a different sum from that demanded by the Respondent, and the Respondent wonders how they arrived at the figure.

 

Since the court is not required to determine the merits of the suit at this stage, I find that the Applicant has shown good cause to be granted leave to defend,  - what they Applicants are contending can only be proved effectively if they are granted an opportunity to be heard.  Refer to Geoffrey Gatete and Angella Kyobe SCCA NO.7/2005 Mulenga JSC.

 

Decided cases have also established that “where there is a real dispute as to amount claimed which requires the taking of an account, then the Applicants ought to be granted leave to defend.” -  See Bhasker Kotecha vs. Adam Mohammad CACA No 48/2001-[2002] IEA 112.

 

For all those reasons, the Applicants are hereby granted unconditional leave to defend the suit.  The defence should be filed within 10 days from the date of this ruling.

 

The costs will abide the outcome of the main suit.

 

FLAVIA SENOGA ANGLIN

JUDGE

21.01.15