Court name
HC: Civil Division (Uganda)
Judgment date
17 June 2014

Bunjo v KCB Bank Uganda Ltd (Miscellaneous Application-2014/174) [2014] UGHCCD 177 (17 June 2014);

Cite this case
[2014] UGHCCD 177

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT NAKAWA

MIC.APPLICATION NO.174 OF 2014

(Arising from Civil Suit No.86 of 2014)

BUNJO JONATHAN=================APPLICANT/DEFENDANT

VERSUS

KCB BANK UGANDA LTD=============RESPONDENT/PLAINTIFF

 

BEFORE: HON MR.JUSTICE WILSON MASALU MUSENE

RULING

This is an Application for unconditional leave to appear and defend the High Court Civil Suit No.86 of 2014 by the Applicant Bunjo Jonathan against the respondent KCB Bank Uganda Ltd under Order 36 Rule 4 and Order 52 Rule 1&3 of the Civil Procedure Rules.

The brief facts in the main suit No. 86 of 2014 are that the Respondent and the Applicant were in a Banker-Customer relationship with the Applicant and on 18th July 2009, the Respondent offered the Applicant a banking facility Loan of UGX 70,000,000 which was accepted by the Applicant. The applicant offered his land comprised in Busiro Block 419 Plot 207 and Busiro Block 383 Plot Kitende as security for the loan which he was to repay in 36months in monthly instalments of UGX 2,673,332 from the date withdrawn. The applicant defaulted in payment and was served with demand notices marked B1 and B2 in the main suit. The respondent sold the Defendant’s security to recover the amount but the sale was insufficient to repay the entire sum which led to the filing of the summary suit No.86 of 2014.

The Applicant then applied in this application to be granted unconditional leave to appear and defend. The grounds in support of the application are contained in the affidavit of the applicant Bunjo Jonathan but briefly are that:-

  1. The Applicant received a loan of UGX 70,000,000 from the Respondent in 2009 against security of two certificates of title for land comprised in Busiro Block 419 Plot 209 at Kisubi and Busiro Block 383 Plot 5651 at Kitende.
  2. The Applicant serviced the loan on a monthly basis in the sum of UGX 2,673,332/= to the satisfaction of the Respondent
  3. That subsequently, the titles for Busiro Block 383 Plot 5651 at Kitende was sold at UGX50,000,000 without the consent of the Applicant which price was sufficient to retire the entire loan since the Applicant had effected various deposits while servicing the loan.
  4. The Applicant had a potential buyer offering to purchase the said property at UGX 100,000,000/= which offer was declined by the Respondent
  5. That the remaining security for Busiro Block 419 Plot 209 at Kisubi is of a much higher value than the balance claimed by the Respondent since it was valued at UGX 100,000,000/= by the Respondent’s valuers.
  6. That it is just and equitable that the Application be allowed since it would not prejudice the Respondent in anyway.

The Respondent also filed an affidavit in reply sworn by Anok Patrick.

The Applicant was represented by M/S Musoke Suleiman &Co. Advocates while the Respondent was represented by M/S Muwema & Mugerwa Advocates. Both counsel submitted written submissions.

Counsel for the Applicant submitted that the legal issue that arises for determination is whether or not the application raises any triable issues for which the Applicant can be granted leave to appear and defend. He stated that under Order 36 Rule 4 of the Civil Procedure Rules, an application for leave to appear and defend shall be supported by an affidavit which states whether the defence goes to the whole or to part only of the plaintiff’s claim.

Counsel invited court to consider the case of Makula Interglobal Trade Agency Vs Bank of Uganda HCCS No.950 of 1985 where it was held that in a summary suit before leave to appear and defend is granted, the defendant must show that there is a bonafide triable issue of fact or law and secondly whether there is a reasonable ground for defence of the claim. Counsel argued that according to the affidavit of the applicant, the applicant is not indebted to the respondent in the sum claimed in the plaint.

Counsel for the applicant also referred to the case of Jimmy Kasule Vs Steel Rolling Mills(1995)11 where it was held that it is trite law that summary procedure should only be resorted to in clear and straight forward cases where the demand is liquidated and where there are no points for court to try. Counsel contended that in this instant case, this was a secured loan with two titles which had been valued by the Respondent’s Valuers to the satisfaction of Respondent that the land was viable to act as security. He alleged that the first title was sold off without informing the Applicant who had potential buyers with a better price and therefore according to the above facts and authorities, counsel argued that they should be granted unconditional leave to appear and defend.

In opposition, counsel for the Respondent submitted that the applicant’s application does not disclose any plausible defence or triable issues. He stated that the defences in the application are bogus and intended to delay justice and waste court’s time. He referred to the Applicant’s claim in Para 7 of his affidavit that he had a buyer willing to buy the property at UGX 100,000,000/= but did not attach any evidence to prove this. He relied on the case of Sembule Investments Ltd Vs Uganda Baati Ltd Misc.Application No.664 of 2009 arising out of Civil Suit No.410 of 2009 where Hon Lady Justice Mulyagonja while citing the case of Zola and Anor Vs Rali Brothers Ltd [1969]EA 691held that that summary procedure is intended to enable the plaintiff with a liquidated claim to which there is no clear defence to obtain a quick and summary judgment without being unnecessary kept from what is due to him by delaying tactics of the Defendant. The Defendant who wishes to resist the entry of a summary judgment should disclose through evidence that there are some reasonable grounds of defence. The Applicant must show a good defence to the suit.

Counsel further contended that the Applicant’s averment that he serviced the loan to the satisfaction of the bank is not true. He referred to the three demand notices that were sent to the Applicant to which the Applicant made no response or reference and did not adduce evidence to show that he serviced the loans to the bank’s satisfaction.

Counsel further contested the applicant’s argument that the security comprised in Busiro Block 419 Plot 207 at Kisubi is of a much higher value than what is demanded by the respondent and therefore adequate to retire the entire loan. He stated that the said land is a permanent swamp according to an independent valuation done by Sm Cathan Land and Property with express instructions by the bank and that the first valuation which valued the property at UGX.100,000,000/= was done with instructions of the Applicant without input of the Bank. Counsel contended that this valuation was not only flawed but fraudulent since the applicant never disclosed to the Respondent that the land in question was a permanent swamp, over valued the price of his land through his valuer and insists that it is adequate security for his indebtedness inspite of the fact that he knows that is has minimal value. Counsel therefore prayed that the application should be dismissed since the applicant has failed to prove that he plausible defences to the plaintiff’s claim in the plaint.

Counsel also pointed out the fact that the affidavit of the Applicant is riddled with material falsehoods for instance in paragraph 4 where the applicant deponed that the two valuation reports were made and prepared by the respondent was wrong since the reports clearly indicate that they were done on the instruction of the Applicant and not the Respondent. And also the applicant’s claim that he serviced the loan to the satisfaction of the bank was false as shown by the demand notices sent to the applicant.

I have clearly studied and internalized the application, affidavits from both sides, evidence on record and submissions by both counsel.

The law on suits under summary procedure is elaborate as set out under Order36 Rule 2 of the Civil Procedure Rules which provides that it is applicable where a plaintiff seeks a debt or liquidated demand in money payable by the Defendant with or without interest arising out of a contract, a bond, a guaranty or actions to recover land with or without a claim for mesne profits.

Under Order 36 Rule 4 of the Civil Procedure Rules, such a claim/suit under summary suit must be supported by an affidavit to the effect that the Defendant has no defence to the claim.

There are a number of authorities which provide that for an application for leave to defend the applicant has to prove that there is a bonafide triable issue of fact or law that he will advance in defence of the suit. This principle was laid down in the case of Makula Interglobal Trade Agency V Bank of Uganda [1985] HCB 65, at 66 where court held that;

“Before leave to appear and defend is granted, the defendant must show by affidavit or otherwise that there is a bonafide triable issue of fact or law. When there is a reasonable ground of defence to the claim, the defendant is not entitled to summary judgement. The defendant is not bound to show a good defence on the merits but should satisfy the court that there was an issue or question in dispute which ought to be tried and the court shall not enter upon the trial of issues disclosed at this stage.”

It should be noted that at this stage, it is generally accepted that the court should not enter upon a trial on any of the issues raised. However, in the case of Corporate Insurance Co. Ltd V Nyali Beach Hotel Ltd [1995-1998], the court of Appeal of Kenya ruled that leave to appear and defend will not be given merely because there are several allegations of fact or law made in the defendant’s affidavit. The allegations are investigated in order to decide whether leave should be given. As a result of the investigation even if a single defence is identified, or found to be bonafide, unconditional leave should be granted to the defendant.

Further still, in the case of Uganda Commercial Bank Vs Mukoome Agencies [1982] HCB 22, the then court of Appeal Justices, Musoke, P, Lubogo V.P and Nyamuchoncho, J.A unanimously held that in Applications for leave to appear and defend in summary suits, the defence and triable issues must not only be disclosed, but that the intended written statement of Defence should be annexed to the Application. Their Lordships then emphasized that it would serve a good purpose if the intended written statement is annexed to the Notice of Motion as it would help the Judge make up his mind whether to refuse or grant the application.  

I am therefore of the opinion that the defendant who seeks leave to defend must disclose a good defence. I will therefore now proceed to examine the defences that have been raised by the defendant so as to establish whether these defences are plausible to warrant this application.

The Applicant agreed to have received a loan of UGX 70,000,000 from the Respondent in 2009 against security of two certificates of title for land comprised in Busiro Block 419 Plot 209 at Kisubi and Busiro Block 383 Plot 5651 at Kitende. His point of contention is that this land had been valued by the Respondent’s Valuers to the satisfaction of Respondent that the land was viable to act as security. The respondent on the other hand denied any involvement with the valuer and claimed that the valuation was done with instructions of the Applicant without input of Bank.

I have carefully analysed the valuation reports of the land in question prepared by Associated Consulting surveyors. According to the terms of reference, it states that they received instructions from Mr. Bunjo Jonathan who is the applicant to undertake an Appraisal Report and Market Valuation of the property for onward submission to KCB the Respondent. This reference is stated on both plots of land. This clearly points out the fact that the valuation reports were authorised by the applicant himself and not the Respondent as he alleges because the wording on the reports is clear as to who authorised the surveyors to carry out the report. I have also analysed the copy of the loan facility which was attached and marked D in the affidavit in rejoinder by Anok Patrick. According to paragraph 9.6, it is stated that the borrower is to avail a copy of the valuation report of land and property offered as security addressed to KCB Bank. This term further illustrates the fact that the duty to authorise the valuation report was solely on the borrower right from the beginning and he is therefore estopped from denying it since he duly read and signed the Loan Facility. The Applicant’s defence therefore that the valuation reports were made and authorized by the Respondent is not genuine and not plausible to warrant this application.

The Applicant further raises the defence that despite servicing the loan to the satisfaction of the Bank, the bank went ahead to sell the land comprised in Busiro Block 383 Plot 5651 Kitende without his consent and yet he had potential buyers with a better price. I have clearly analysed copies of reminders attached to the affidavit of Anok Patrick marked annexure C1 and C2.  These reminders clearly depict dissatisfaction by the Bank with the Applicant in failing to clear the outstanding arrears which shows that the Applicant never serviced the loan to the satisfaction of the Respondent as he claims in his affidavit. Further still, I am inclined to agree with Counsel for the Respondent’s argument that according to the loan facility, it was clear that upon default the security would become enforceable whereupon all amounts payable by the applicant was to become immediately due and payable without protest or notice. This was a contract dully signed by both the Applicant and the Respondent out of free will and is therefore binding upon both parties. Court will therefore not inquire and intervene in the terms agreed upon by both parties and therefore finds that the defence raised by the Applicant in relation to the Respondent having sold the security without his consent is not viable.

In relation to the above, the Applicant argued that he had potential buyers with a better price. Counsel for the Respondent on the other hand contended that the Applicant did not attach any evidence to prove this claim. He merely asserts but does not prove this in any way. I have read the decision in Sembule Investments Ltd Vs Uganda Baati Ltd Misc.Application No.664 of 2009 arising out of Civil Suit No.410 of 2009 where Hon Lady Justice Mulyagonja 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. I am in total agreement with this holding. Resisting of a summary judgment should not be 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/ she intends to rely on to prove his defence which was not the case in the present case.

In conclusion therefore, I find the Applicant’s defences unsustainable and not valid. No genuine or plausible triable issues were raised by this application for leave to appear and defend. It is hereby dismissed with costs to the Respondent. Judgment is therefore hereby entered for the Plaintiff in the sum of UGX 50,000,000/= with costs.

 

.....................................................................

WILSON MASALU MUSENE

JUDGE

17/06/2014