Court name
Commercial Court of Uganda
Judgment date
2 March 2015

Karuhanga v Vivo Energy Uganda Ltd (Miscellaneous Application-2014/200) [2015] UGCommC 69 (02 March 2015);

Cite this case
[2015] UGCommC 69

                                                

                                             THE REPUBLIC OF UGANDA

                                   IN THE HIGH COURT OF UGANDA AT KAMPALA

                                                      [COMMERCIAL DIVISION]

                                MISCELLANEOUS APPLICATION No. 200 OF 2014

                                      [Arising out of Civil Suit No. 244 of 2014]

STELLA KARUHANGA :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT

                                                                    VERSUS

VIVO ENERGY UGANDA LIMITED :::::::::::::::::::::::::::::::::::::::::: RESPONDENT

 

BEFORE HON. Mr. JUSTICE B. KAINAMURA

RULING

The applicant applied to court by Notice of Motion under Order 36 rule 1 and 4 of the CPR to be granted unconditional leave to appear and defend Civil Suit No. 526 of 2013 and for costs. The grounds of the application are-:  that the applicant has a reasonable defence to the suit, the applicant additionally disputes the quantum, the alleged contract and entire basis of the suit, and that it is in the interest of justice that the application be granted.

The application is supported by an affidavit of the applicant Stella Karuhanga. The facts as deposed are that the applicant took over management of a petrol station known as “Shell Lugogo” which was not doing well at the time of take over. The applicant, due to demands from the respondent to meet the set targets, started running a business that was based on 80% credit sales.  The customers would delay to pay in time. The respondent aware of that position nonetheless suspended the dealership of the applicant. She further deposed that at the time of suspension the outstanding amount was UGX 22,000,000/= but to the contrary, the respondent on the 15th May 2007 sent a statement to the applicant showing UGX 48,277,777/= as the outstanding amount. Additionally that the respondent continues to come up with false and imaginary figures in an incoherent manner from firstly UGX 22,000,000/= to UGX 56,724,959/= in the plaint. That further, the claims include utility bills for the months she had long left the petrol station.

 In reply Stephen Chomi the Head Legal with the respondent deponed that there was a retail agreement between the applicant and the respondent for sell of the respondent’s products. Among the terms agreed upon was the meeting of agreed targets of sales but this did not include selling on credit. Secondly, that the respondent by termination of the agreement was exercising a right within the agreement for failure to pay the outstanding amounts due and owing under the agreement. Finally, that the amount claimed in the plaint was arrived at after due reconciliation of all that was due and that the suspension of the account did not take away the respondent’s right to reconcile her account. He concluded that the application does not disclose a good defence and ought to be dismissed with costs.

In rejoinder, the applicant stated that she went to the respondent’s offices made payments and sought clarifications on the outstanding balance from January to April 2014.  She added that since the suspension of her dealership she has only been settling the outstanding balance. She stated further that she has never participated in the reconciliations and never received an explanation as to the fluctuations of figures.

At the hearing, the applicant was represented by E Karuhanga and the respondent by Brian Kalule.

Counsel for the applicant in support of the application relied on the case of Peter Bibagamba Vs Fulgence Mungereza and Nile Mining Limited Misc App. No. 103 of 2012 where Obura J stated;

“The law governing an application for leave to appear and defend a suit is                      now settled............... the defendant must show that there is a triable issue of fact or law. The applicant is not bound to show a good defence on the merits of the case but should satisfy court that there is an issue or a question in dispute which the court ought to determine between the parties. Where a suit is brought under summary procedure on a specially endorsed plaint the defendant is granted leave to appear if he was able to show that he had a good defence on merit or that a difficult point of law is involved,...............................or a real dispute as to the amount claimed requires taking an account to determine or any other circumstances showing reasonable grounds of a bonafide defence.”

He submitted that the application, the reply and the rejoinder all point to the fact that the applicant has a reasonable defence to the main suit; and that there is a real dispute as to the quantum and facts to be tried. He stated that this case is a clear one in which an application for unconditional leave to appear and defend would be granted.

He prayed that the application be allowed with costs.

Counsel for the respondent in his submission summarized the principles to be considered so as to grant leave to defend as;

The applicant should show that he has a good defence to the claim (Kotecha Vs Mohammed (2002) 1 EA 112 and Order 36 rule 7 CPR)

The allegations of fact or law to be tried should be investigated to ensure they are genuine and not a sham. (Corporate Insurance Co. Ltd Vs Nyali Beach hotel (1995-98) EA 7)

Where court is in doubt whether the defence proposed is in good faith, the court may order the defendant to deposit money in court before leave is granted. (Milter Investments Ltd Vs East African Portland Cement Co. Ltd HC-MA No. 336 of 2012.)

Counsel emphasized that the claim in the plaint is UGX 50,742,959/=. He added that the defences are unsustainable factually and legally and therefore a sham. He stated that according to Trietel’s Law of Contract (10th Edition) at page 175, a person is bound by their signature to a document. He stated that in absence of any grounds that vitiate a contract, the applicant cannot use the claim of high targets as an excuse. He further stated that the agreement could be terminated for failure to pay the outstanding amounts and the invoices of payment claimed by the applicant do not correspond with the ones claimed in the plaint. In conclusion, Counsel submitted that the applicant had not raised a sustainable defence in law or fact to warrant the grant of leave to appear and defend. He prayed that the application be dismissed with costs and judgment entered as prayed in the plaint. He added that in the alternative, if court is inclined to grant leave then it should be conditional.

In rejoinder, Counsel for the applicant stated that the applicant is entitled in fact and law to defend herself from the false claims raised by the respondent. With regard to the monetary aspect of the claim, Counsel urgued that the applicant had paid in full sums allegedly due to the respondent. In response to the claim that the defence is a sham, Counsel submitted that the respondent claimed figures that kept on changing. He stated that at first it was UGX 22,000,000/=, then after the suspension UGX 44,000,000/=, then UGX 48,277,777/=, then UGX 56,724,959/= and now the figure is UGX 50,724,959/=.

Counsel contended that the applicant maintains that she settled fully UGX 23,967,210/= that was the outstanding debt.

With regard to the invoices, Counsel submitted that the applicant’s defence was completely misunderstood because the receipts attached were to prove the payments the applicant had consistently made. He added that the applicant had stated in paragraphs 24, 16 and 17 of the affidavit in support of the application that she had made monthly payments, but the respondent receipted that money with false narratives and on each occasion gave a different balance and refused to acknowledge or receipt certain payments made. Counsel submitted that the defence is therefore tenable and not based on false and wild allegations. In reference to the case of Milter Investments Vs East African Portland Cement Co. Ltd (supra) relied on by the respondent, Counsel stated that court held that whenever there is a genuine defence either in fact or law the defendant is entitled to unconditional leave to appear and defend.

In conclusion, Counsel submitted that whenever there is a bonafide dispute, the law is settled that unconditional leave to appear and defend will be granted. Counsel prayed that the application be allowed with costs.

Ruling

I have read through the pleadings of the parties and submissions of both Counsel. The plaintiff claim as set out in the plaint is for UGX 50,742,959/= arising from monies the defendant had not paid for the products supplied to the petrol station she operated and utility bills that remained unpaid. The plaintiff is a company carrying on the business of trade in petroleum products while the defendant was an operator of a service station known as “Shell Lugogo”. They had a retail licensing agreement which the plaintiff/respondent suspended and later filed a summary suit for a liquidated demand for which the applicant seeks leave to appear and defend.

The application for leave to appear and defend is provided for under Order 36 Rule 4 of the CPR. The conditions that ought to first be met before leave is granted have long been settled.  In Kotecha Vs Mohammed [2002]1 EA 112, court held that,

“Where a suit is brought under summary procedure on a specially endorsed plaint, the defendant is granted leave to appear and defend if he was able to show that he had a good defence on merit, or that there is a difficult point of law involved; or a dispute as to the facts which ought to be tried ;or a real dispute as to the amount claimed which requires taking into account to determine ; or any other circumstances showing reasonable grounds of bonafide defence.”

Counsel for the applicant submitted that the applicant has a plausible defence which include that the respondent suddenly suspended the contract, secondly the respondent receipted money with false narratives and on each occasion gave different balance, lastly, the respondent refused to acknowledge or receipt certain payments made. He raised the issue that monies owed kept changing. The respondent initially demanded UGX 22, 000,000 then after the suspension UGX 44,000,000, then claimed UGX 48,277,777, then UGX 56,724,959 and the figure came finally to UGX 50,724,959.

In reply, Counsel for the respondent contended that the applicant had no plausible defence but rather a sham. This is because the applicant allegedly breached the contract by failing to pay the balance owed which gave the respondent the right to suspend the contract as agreed.

In my view, the applicant has demonstrated that there is a dispute as to the facts which ought to be tried. I believe it is incumbent on the respondent to show how it arrived at the sums due in view of the inconsistencies demonstrated by the disparity in the figures demanded from the applicant over the period leading to the filing of the suit.

It is also the duty of court at this level of the suit to establish whether there is a plausible defence before leave to appear and defend is granted. The liquidated claim of UGX 50,724,959 is disputed by the applicant for reasons already stated, accordingly in my opinion a summary judgment ought not to be granted at this stage.

Consequently, the applicant merits grant of unconditional leave to appear and defend the suit and it is accordingly granted. The applicant shall file a written statement of defence within seven days from the date of this ruling.

Costs of the application shall be in the cause.

I so order.

 

 

B. Kainamura

Judge

2.03.2015