Court name
Commercial Court of Uganda
Judgment date
2 November 2017

Ecobank Uganda Ltd v Kalsons Agrovet Concerns Ltd & 2 Ors (Civil Suit-2016/573) [2017] UGCommC 141 (02 November 2017);

Cite this case
[2017] UGCommC 141

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

[COMMERCIAL COURT]

CIVIL SUIT No.  573 OF 2016

ECOBANK UGANDA LIMITED ::::::::::::::::::::::::::::::::::::::::::::::::: PLAINTIFF

VERSUS

1. KALSONS AGROVET CONCERN LTD

2. PATRICK KALIISA                                               ::::::::::::::::::::::::: DEFENDANTS

3. HNERY KALIISA

 

BEFORE: HON.  MR. JUSTICE B. KAINAMURA

 

RULING ON A PRELIMINARY POINT OF LAW

The plaintiff, in this matter filed a suit against the defendants seeking a liquidated sum of UGX 517,648,784.35 being accrued principle amount and interest owing from a loan facility extended to the 1st defendant by the plaintiff Company, general damages, interest and costs of the suit. In the plaint the plaintiff stated that by a letter dated 25th November 2009, the plaintiff extended a short term loan facility to the 1st defendant of UGX 487.559.000 and it was agreed that the loan be repaid by the 30th December 2009 at the interest rate of 24% per annum.

That by personal guarantees, the 2nd and 3rd defendant guaranteed the payment on demand of all sums which become due whether at maturity, due to prepayment, default in the terms of the facilities owing to the plaintiff together with interest, commissions charges, costs and expenses until the date of full repayment.

The 1st defendant continually defaulted on agreed timelines for the payment of the loan facility and interest accruing and despite repeated reminders and a formal demand has failed and/ or neglected to regularize the arrears on the loan facility. The 2nd and the 3rd defendants also defaulted on payment as agreed in the personal guarantee agreement executed in favour of the plaintiff.

The defendants filled written statements of defence and when the matter came up for hearing, the plaintiffs raised a preliminary objection that the written statement of defence bears general denials and should be struck out in accordance with O 6, r 8 and 10 of the Civil Procedure Rules.

The plaintiff relied on the case of Nile Bank and Anor Vs Thomas Kato and Others HCMA No. 1190 of 1999 where court held that where the defense filled contains general denials to the plaintiff’s allegations, offended the provisions of O 6 r 7(now Rule 8) of the Civil Procedure Rules which requires each party to deal with each allegation of fact as denied.

The plaintiff further stated that O.6 r 10 of the Civil Procedure Rules requires a defendant who denies an allegation of fact in the previous pleading of the opposite party not to do so evasively but answer the point of substance. That the point of substance in this case is whether there was a loan facility advanced in January 2010 which is different from the one in question. That the defendants do not deny the existence of the loan facility in question but rather generally deny the grounds of claim of the plaintiff without specifics as to whether the loan facility was ever advanced to the 1st defendant or whether the facility was indeed paid.

Ruling

The plaintiff in paragraphs 2, 3 and 4 of the plaint, described the 2nd and 3rd defendant as directors of the 1st defendant and were being sued as a guarantor of a loan advanced to the 1st defendant.  In response thereto, the defendants merely denied the contents of the paragraph 2,3 and 4.  In other words, the defendants in a general manner denied that the said parties were directors or guarantors.

 

In paragraph 5 of the plaint, the plaintiffs stated their claim against the defendants and noted that it was for a liquidated sum of UGX 517,648,785.35 being an accrued principle amount and interest owing from a loan facility extended to the 1st defendant.  In response thereto, the defendants merely denied the claim and made no response to the claim.

 

In paragraph 6 of the plaint, the plaintiff listed the facts from which the cause of action against the defendants arose.  In response thereof, the defendants merely denied the facts and stated that the plaintiff shall be put to strict proof thereof. The defendants further stated that the defendants shall aver and state that the plaintiff’s actions were illegal, fraudulent and intended to unjustly enrich themselves which is not permissible in law.

 

The defendants then went ahead and gave particulars of illegality and fraud and in paragraph 6 stated that the matter is alien to them and the suit lacks merit, is frivolous, vexatious, an abuse of court process, bad in law and the plaint is against the law.

Order 6 rule 8 CPR provides:

“It shall not be sufficient for a defendant in his or her written statement to deny generally the grounds alleged by the statement of claim, or for the plaintiff in his or her written statement in reply to deny generally the grounds alleged in a defence by way of counterclaim, but each party must deal specifically with each allegation of fact of which he or she does not admit the truth, except damages.”

According to Odgers Principles of Pleading and Practice, 22 Edition at page 136,

 

“It is not sufficient for a defendant in his defence to deny generally the allegations in the statement of claim, or for the plaintiff in his reply to deny generally the allegations in a counterclaim.  Each party must traverse specifically each allegation of fact, which he does not intend to admit.  The party pleading must make it clear how much of his opponent’s case he disputes.” 

It is clear in the instant case that the plaintiff made a claim basing on a loan facility advanced to the defendants. They attached a copy of an offer letter; the respective guarantees letters, repayment schedules and a formal demand to their plaint.

 

On the other hand, the defendants denied each claim and never responded to it in specific terms as required by the law. The defendants in their respective defences merely averred illegality and fraud and intended attempt by the plaintiff to enrich themselves.  I have not seen any substantial defence or any intelligible response to the claim. Consequently, I find that the defence did not raise a reasonable answer to the applicant’s claim and thus offended the provisions of O 6.r 8 of the Civil Procedure Rules.  It is accordingly struck out.

In the result judgment is hereby entered for the plaintiff against the defendant for the liquidated sum of UGX 517,648,784,35/= (Uganda Shillings Five Hundred Seventeen Million Six Hundred and Faulty Eight Thousand Seven Hundred and Eighty Four Thirty Five Cents Only) being the accrued principal amount and interest owing from the loan facility.

The rest of the claim shall be set down for formal proof

I so order.

 

 

 

B. Kainamura

Judge

02.11.2017