Court name
Commercial Court of Uganda
Judgment date
22 January 2021

Federation of Uganda Football Association v Mandela National Stadium Ltd. (Miscellaneous Application-2020/570) [2021] UGCommC 1 (22 January 2021);

Cite this case
[2021] UGCommC 1
Coram
Abinyo, J

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA
(COMMERCIAL DIVISION)
MISCELLANEOUS APPLICATION NO. 570 OF 2020
(ARISING FROM CIVIL SUIT NO. 422 OF 2020)

FEDERATION OF UGANDA FOOTBALL ASSOCIATION................................. APPLICANT

VERSUS

MANDELA NATIONAL STADIUM LTD.............................................................. RESPONDENT

BEFORE: HON. LADY JUSTICE SUSAN ABINYO

RULING

This is an application brought by notice of motion under the provisions of Order 36 Rules 3(1) & 4 and Order 52 Rules 1 & 3 of the Civil Procedure Rules where the Applicant seeks for the following orders:

  1. That unconditional leave be granted to the Applicant to appear and defend Civil Suit No. 422 of 2020.
  2. Costs of the application be provided for.

Facts:

This Application is supported by an affidavit of Mr. Edgar Watson Suubi the Chief Executive Officer of the Applicant deposed in paragraphs 1-14 and summarized as follows: -

That on the 21st of April, 2015, the Respondent filed Civil Suit No. 293 of 2015 against the Applicant seeking for UGX. 194,863,217/- as accumulated outstanding arrears resulting from use of the stadium to organize Uganda Cranes games.

That in a bid to settle the above mentioned civil suit and with good will the parties executed a memorandum of understanding dated 12th June, 2017, wherein the Applicant agreed to pay all the substantiated and proved arrears in
the head suit. That the Applicant has since paid the whole claim in Civil Suit No. 293 of 2015 as seen in the receipts attached and marked Annexture “A”.

That at the material time of executing the said memorandum of understanding, the Respondent's officials claimed that URA penalized them with UGX. 38,335,888/- interest on the then outstanding arrears and that UGX. 48,071,000/- accumulated after the head suit No. 293 of 2015 was filed in court and the Respondent requested the Applicant to recognize the said claims in the memorandum of understanding.

That the Applicant believed the claims to be genuine, recognized and executed the memorandum of understanding as a gesture of goodwill. That despite several reminders, the Respondent has completely refused to avail the required documents from URA to the Applicant to verify the authenticity of the claims.

That the sums claimed in the main suit and indicated in the memorandum of understanding have no corresponding consideration in the absence of accumulation of interest and payment to URA; condemning the Applicant to pay the same on the basis of the memorandum of understanding when it is not proved would grossly be unjust to the Applicant.

That the Applicant shall adduce evidence to prove that it was misled and or misrepresented to believe that the alleged claims existed whereas not and that this cannot be determined in a summary manner.

That the Respondent lacks a liquidated claim to warrant court to issue a summary judgment, the claim needs to be substantiated beyond mere presentation of a memorandum of understanding.

That the Applicant has a good and plausible defense to the claim filed by the Respondent.

That the Respondent's claim is strongly disputed.

The Respondent’s evidence in an affidavit in reply deponed in paragraphs 1-7 by Jamil Sewanyana Mpagi, the Managing Director is summarized as below;

That the Applicant signed the agreement well aware of the debt claimed.

That the said amount is due and owing to the Respondent

That the application is devoid of merit.

Representation

The Applicant was represented by Counsel Ambrose Tebyasa and Counsel Lukambe Dennis of Ambrose Tebyasa & Co. Advocates while the Respondent was represented by Counsel Oscar Kamusime of M/S Birungyi, Barata & Associates. Both Counsel filed written submissions.

Issue for determination:

Whether the application satisfies the grounds for grant of unconditional leave to appear and defend the suit.

Submissions

Counsel for the Applicant submitted that the Respondent’s suit or claim of UGX. 86,352,888/- does not conform to the confines of a liquidated demand because its existence requires more investigation by court than mere presentation of the memorandum of understanding and relied on the case of Begumisa George Vs East African Development Bank H.C.M.A No. 451 of 2010 on the definition of a liquidated demand.

Counsel contended that in paragraphs 9, 10 & 1 lof the affidavit in support of the application, Edgar Watson deponed that he was misled and misrepresented to include the claims in the memorandum of understanding because he believed that actually the Respondent was penalized with UGX. 38,335,888/-as interest by URA on behalf of the Applicant whereas not and further misled to believe that UGX. 48,071,000/- had accumulated. That he expected the Respondent to avail proof to substantiate the claims which the Respondent has failed to date.

Counsel submitted that in the instant case, the Respondent’s claim of UGX. 86,352,888/-is based solely on a memorandum of understanding which the Applicant never intended to create a legally binding claim without proof of the claimed amount and that the Respondent did not furnish any consideration for the memorandum of understanding.

Counsel further submitted that the application and affidavit in support raises several triable issues that requires court’s determination at a full trial and relied on the case of Abdul Malik Mugisha Vs Equity Bank (U) Ltd H.C.M.A No. 228 of 2014 which cited with approval the case of Maluku Infer global Trade Agency LTD Vs Bank of Uganda [1985J HCB at pg. 65 in which it was held that where a defense is allowed on merit it does not mean that it is a successful defense and that a successful defense means that the defendant had raised triable issues (and not a sham) and which issues should therefore go for trial.

Counsel thus prayed that this application for unconditional leave to appear and defend the suit be granted with costs in the cause.

In reply, Counsel for the Respondent submitted that the sum being demanded is a liquidated demand because it is a specific sum of money due and payable by virtue of the memorandum of understanding and business approval form marked Annexture 'B3' to the specially endorsed plaint.

Counsel contended that the memorandum of understanding dated 12th June,2017 is a complete contract and constitutes an undertaking on the part of the Applicant to pay the sums defined therein. That the Applicant's claims regarding mistake and misrepresentation are mere allegations of law intended to keep the Respondent away from its money as the said allegations are not supported by any documentation.

Counsel further submitted that the Applicant’s contention that the memorandum of understanding is not supported by consideration is misconceived. That the Applicant was well aware of the sum at the time the memorandum of understanding was executed.

Counsel further contended that the Contracts Act, 2010 defines the term consideration to mean:

“A right, interest, profit or benefit accruing to one party or forbearance, detriment, loss or responsibility given, suffered or undertaken by the other party."

Counsel submitted that clause 4 therein shows that in consideration of payment of monies, the Respondent promised to waive further proceedings against the Applicant and that this constitutes a forbearance or responsibility undertaken by the Respondent hence consideration sufficient to support the agreement. That the suit was properly brought under Order 36 of the Civil Procedure Rules.

Counsel prayed that that this honorable court be pleased to find that this suit is properly brought under Order 36 and that the Applicant has failed to prove a prima facie defense and dismiss this application with costs and enter judgment
for UGX.86,352,888/-being money due under the memorandum of understanding and UGX. 1,500,000/- being the balance on UGX.9,000,000/- having paid a further 6,000,000/-during the course of the proceedings and interest from the date of the judgment till payment in full together with tn© costs in respect of the head suit.

In rejoinder, Counsel for the Applicant submitted that the whole QITIOUnt Of 9,000,000/- for the flood lights was paid as shown by the attached receipts and reiterates its earlier prayer that the Applicant be granted leave to appear and adduce evidence that the whole amount was for payment of flood lights and not other services as alleged by the Respondent.

Counsel further submitted that the amount of UGX. 194,863,217 was the actual figure that was claimed in Civil Suit No. 239 of 2015, the consent judgment was executed, amount paid and the case was duly settled. That the consent judgment was the consideration for the amount of UGX. 194,863,217/- and that it was not paid on the basis of the memorandum of understanding per se as the Respondent attempts to suggest to court.

Counsel contended further that the Respondent had presented to it two reasons that led to UGX. 86,352,888/- to be recognized in the memorandum of understanding that is that URA had penalized the Respondent on behalf of the Applicant to the tune of UGX. 38,335,888/- and hence the Respondent had to be compensated and that UGX. 48,071,000/- had accumulated for services provided for the Respondent after Civil Suit No. 239 of 2015 was filed.

Counsel thus reiterated their earlier prayer that this application for unconditional leave to appear and defend the suit be granted with costs in the main cause.

Decision:

I have carefully perused this application together with the supporting affidavits of the parties and taken into consideration the submissions of both Counsel.

I find that claims that fall under Order 36 Rule 2(a) of the Civil Procedure Rules are well known but for emphasis, they are claims where the Plaintiff seeks to recover a debt or liquidated demand with or without interest arising from a contract, expressed or implied; a bond; Guaranty; Trust and upon Income Tax to Government.

It follows therefore, that the plaintiff’s claim may be based on a debt or a liquidated demand a rising from any of the above listed circumstances.

In the instant application, the Respondent’s/Plaintiff’s claim whereupon the Applicant/ Defendant seeks leave to appear and defend the suit, is based on the recovery of a specific sum of money arising out of a memorandum of understanding signed by the parties; this in my considered opinion need not be based on any contract but may in itself be a contract or form part of a contract expressly agreed by the parties.

Section 10(1) of the Contracts Act defines a contract to mean an agreement made with the free consent of the parties with the capacity to contract, for lawful consideration and with a lawful object, with the intention to be legally bound. [ Emphasis is mine]

The Applicant contests the lawfulness of the Plaintiff's / Respondents claim of UGX. 93,852,888/- (Uganda Shillings Ninety Three Million Eight Hundred and Fifty Two Thousand Eight Hundred and Eighty Eight Shillings) which is a claim for an amount previously agreed by the parties in a memorandum of understanding.

The argument by Counsel for the Applicant that the Respondent's claim of UGX 86,352,888/- is based solely on a memorandum of understanding not supported by any legal proof or consideration and requires more investigation beyond the MOU and that the MOU per se is not a contract to sustain the Respondent’s claim as a liquidated demand is misconstrued upon Counsel’s reliance on the case of A- Tec Industries (Uganda)Ltd & Anor Vs E-Krail Investments Ltd & Anar H.C.M.A No. 55 of 2012 to support his argument.

I agree with Counsel for the Respondent that the facts in the case of A- Tec Industries (Uganda)Ltd & Anor Vs E-Krail Investments Ltd & Anor(supra) is distinguishable in that it related to the conveyance of a sub-lease by means of a memorandum of understanding and that the Judge stated that a distinction must be drawn between , on one hand , documents which are only informal memoranda, and, on the other, those which are intended as complete contract documents i.e., exhaustive records of the terms finally agreed to which parties consider themselves bound... The courts will however attempt to give effect to individual heads of the MOU to the extent that they are severable and binding where it is possible to construe a reasonable construction of the undertaking.

In the instant case. Clause 3 of the MOD clearly states that THE 2nd PARTY HEREBY SPECIFICALLY AGREES AND COVENANTS WITH THE ]st pARTY as under: To expressly perform all the terms and or conditions of these presents without exception and specifically pay the aforementioned sum in a manner and style as herein above agreed without any deductions.

From the above clause, it is clear that the parties intended to be bound by the MOU and as such it had a legal effect.

A liquidated claim also termed as a liquidated demand is a claim for an amount previously agreed on by the parties or that can be precisely determined by operation of law or by the terms of the parties’ agreement, (see Black’s Law Dictionary, Seventh Edition pg.240); and Begumisa’s case, (supra) Pg. 13 on the definition of a liquidated demand.

From the MOU, it can be construed that the amount of UGX. 86,352,888/- is a claim for an amount previously agreed by the parties in a memorandum of understanding dated 12th June, 2017 thus a liquidated claim within the meaning of Order 36 of the Civil Procedure Rules and, this court has found as above that the MOU is binding on the parties and has legal effect.

Accordingly, this suit is properly brought under order 36 of the Civil Procedure Rules.

I agree with the decision in the case of Begumisa George Vs East African Development Bank (supra) where the court comprehensively discussed the evolution of the law on this subject matter and its now settled law that an application for leave to appear and defend can only be granted when the Applicant has showed by way of an affidavit or otherwise that there is a bonafide triable issue of fact or law and, that there is a plausible defence which must be stated with sufficient particularity to appear genuine. General or vague statements will not suffice, (see Maluku Intergiobal Trade Agency Ltd Vs Bank of Uganda [1985] HCB 65) and the case of Sembule Investments Ltd Vs Uganda Baatl Ltd H.C.M.A No.664 of 2009 arising out of Civil Suit No.410 of 2009 where Mulyagonja. J (as she then was) stated that the Defendant who wishes to resist the entry of a summary judgment should disclose through evidence that there are some reasonable grounds of defence.

From the above decision, it is clear that a summary judgment should not be entered based on mere assertions of probable defences available to the defendant but rather the defendant should take a step further and show court the evidence he or she intends to rely on to prove his or her defence.

In the instant case the Plaintiff's/Respondent's claim against the Defendant /Applicant in Civil Suit No. 422 of 2020 is for recovery of UGX. 93,852,888/" (Uganda Shillings Ninety Three Million Eight Hundred and Fifty Two Thousand Eight Hundred and Eighty Eight Shillings) as sums due and owing to the Plaintiff of UGX 86,352,888/- on interest to URA and amounts that accumulated after the institution of H.C.C.S No. 239 of 2015; UGX 7,500,000/- as the balance from UGX. 9,000,000/- a sum arising from the provision of flood lights for the purpose of televising the football match between Uganda and Malawi.

There is a further contention on how much money was first deposited for the flood lights as the Applicant avers that it first deposited UGX. 3,000,000/- and remained with a balance of UGX 6,000,000/- which it paid in the course of the proceedings. The Respondent on the other hand avers that the Applicant deposited UGX. 1,500,000/- and remained with a balance of 7,500,000/- and now having paid UGX 6,000,000/-there is a balance of 1,500,000/- which the Applicant disputes.

The above assertions by the Applicant which are controverted by the Respondent, raise triable issues which require investigation by the court and cannot be settled in a summary manner.

In conclusion, I find that the Applicant has raised triable issues of fact and a plausible defence whereupon; this merits the grant of unconditional leave to the Applicant to appear and defend the suit.

This Application is therefore allowed with the following Orders;

  1. The Applicant is hereby granted unconditional leave to appear and defend in Civil Suit No.422 of 2020.
  2. The Applicant shall file a written statement of defence within 10 days from the date hereof.
  3. Costs of the application will abide the outcome of the main suit.

Ruling delivered by email this 22nd day of January, 2021.

SUSAN ABlNYO

JUDGE

22/01/2021