Mugenyi v Velisa (Miscellaneous Application 1173 of 2022) [2024] UGCommC 114 (2 May 2024)

5 THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISCELLANEOUS APPLICATION NO. 1173 OF 2022 (ARISING OUT OF CIVIL SUIT NO. 481 OF 2020) 10 YESERO MUGENYI :::::::::::::::::::::::::::::::::::::::::::: APPLICANT VERSUS

VELISA ELIZABETH DELFOSS-INGLETON ::::::::::::: RESPONDENT Before Hon. Lady Justice Harriet Grace Magala

Ruling

15 Background

The Respondent sued the Applicant for breach of contract, misrepresentation, costs for her stay in Uganda, damages and costs vide HCCS No. 481 of 2020. It was later discovered by the Applicant, that the Respondent had no permanent address within the jurisdiction of this court and the Applicant believes he is being 20 caused to incur unnecessary costs and expenses defending such a bad and frivolous suit. This Application seeks for orders that the Respondent furnishes security for all costs that are likely to be incurred by the Applicant in defending the suit instituted by the Respondent and costs of this Application be in the cause.

The grounds of this Application are that:

25 a) The Respondent ordinarily resides outside jurisdiction and has no known address and place of abode within Uganda.

- 5 b) The Respondent is a Jamaican citizen with no assets in Uganda capable of satisfying the award of costs in this Court. - c) It is in the interest of justice that the current Application is granted.

The affidavit in support of the Applicant was deposed by the Applicant and it briefly states that:

- 10 i) The Respondent sued him seeking for inter alia a declaration for breach of contract, misrepresentation, special damages, general damages, punitive damages, and costs of the suit. - ii) When the Plaintiff was summoned to court to be given directions, it was established from the Respondent's Advocates that she has no 15 physical address and known assets in Uganda. - iii) Since the Respondent is a foreigner and has no known assets within the jurisdiction, he would have a problem recovering his costs in case the suit is decided in his favor. - iv) It would be in the interest of justice that an order for security for costs 20 be granted against the Respondent and that this was a proper case for the court to grant an order for security for costs.

Representation and hearing

The Applicant was represented jointly by Counsel Sebuuta Hamza and Counsel Kamya France of M/s Nsibambi & Nsibambi Advocates while the Respondent,

25 despite being effectively served, as per the Affidavit of service on record never filed any reply to the Application. The Applicant filed written submissions, which this Court has considered in this Ruling.

Observation

The Respondent was served with this Application and hearing notice on the 16th 30 January 2024. To this day an affidavit in reply has never been filed in court.

- 5 There is proof on the court record that the Respondent was served through her lawyers' M/s Ivory Advocates with the Notice of Motion in this Application on the 16 th January 2024 at 11:17am. The time within which a reply to the Application should have been made has long passed. In the application before me, there is the uncontroverted affidavit evidence of Mr. Yesero Mugenyi. It is - 10 settled law that if the applicant supports his application by affidavit or other evidence and the respondent does not reply by affidavit or otherwise, and the supporting evidence is credible in itself, the facts stand as unchallenged (See H. G. Gandesha and Kampala Estates Ltd and G. J. Lutaya, SC Civil Application No. 14 of 1989 and *Serefaco Consultants Ltd Versus Euro* 15 *Consult BV and another CACA 16 of 2007*.

Applicant's submissions

Counsel for the Applicant submitted that Order 26 rule 1 of the Civil Procedure Rules S. I 71-1, as amended gives court the discretion to order for security for costs in the circumstances that the court deems fit. Counsel relied on the case of

- 20 Anthony *Namboro Versus Henry Kaala (1975) HCB 315* where Hon. Ssekandi Ag. J observed that the court may grant an order for security for costs where the Applicant is being put to undue expense by defending a frivolous and vexatious suit, he has a good defence to the suit, he is likely to succeed and the inability to pay by the Respondent. - 25 It was submitted for the Applicant that the suit by the Plaintiff/Respondent is frivolous, lacks no legal merit or basis and does not disclose a cause of action against the Applicant/Defendant since there was no contract between them. It was further submitted for the Applicant that the Respondent never enjoyed any right against the Defendant. She did not come to Uganda at the invitation of the 30 Defendant but on her own volition and any loss she incurred or suffered the - Applicant was not liable for it.

5 On the Applicant having a good defense, it has been submitted that there was no contract between the parties and hence no breach of contract, the Respondent was never invited to Uganda by the Defendant and the money already deposited by the Plaintiff was refunded fully.

As to whether the Applicant is likely to succeed, it was submitted that in the 10 Written statement of defence, the certificate of title is in the name of S & M Holdings Ltd and the draft lease agreement between the Respondent and Applicant was to be executed between S & M Holdings and the Respondent.

On the Respondent's inability to pay, counsel submitted that the Respondent is a foreigner and had no known property in Uganda that can be attached upon

15 failure to pay costs. Counsel relied on the case of Noble *Builders (U) Ltd and another Versus Jabal Singh Sandhu SCCA No. 15 of 2002.*

Counsel concluded that this court should be pleased to grant an order for security for costs against the Respondent.

Determination

- 20 It is trite that the burden of proof is on the Applicant/Defendant to prove that the Plaintiff/Respondent should be ordered to provide security for costs. The issue for trial is, if there exist sufficient grounds to order the Plaintiff/Respondent to furnish security for costs in HCCS No. 481 of 2020. The case of *Anthony Namboro and Fabiana Waburo Versus Henry Kaala (supra)* laid out the 25 considerations for such applications for security for costs as: - *i) Whether the Applicant is being put to undue expense by defending a frivolous and vexatious suit;* - *ii) That he has a good defense to the suit;* - *iii) And that he is likely to succeed.*

- 5 In the case of *GM Combined (U) Ltd Versus AK Detergents (U) Ltd (1999) 2 E. A at 94,* Hon. Oder JSC at page 105, observed that the Court must consider the *prima facie* case of both the Plaintiff and the Defendant. An assessment must be made based on the pleadings and the affidavits in support and opposition of the Application for security for costs. - 10 As to whether the Applicant is being put to undue expense by defending a frivolous and vexatious suit, a frivolous case is one that lacks legal basis or merit, and a vexatious suit is one that is brought by the party not acting *bona fide* and merely wishes to annoy or embarrass the opponent when it is not calculated to lead to any practical result. See. *Ndungo Seti and two others* - 15 *Versus Sekiziyivu Sammy Moses and another HCCS No. 286 of 2011*.

A reading of the Plaint shows that the Plaintiff's claim is for breach of contract, misrepresentation, costs incurred for her stay in Uganda, compensation and damages for inconvenience, mental anguish and embarrassment, interest and costs. This arose out of contractual negotiations between the parties for the

20 renting of property comprised in *LRV 801 Folio 24 Plot 27 Kololo Hill Drive (herein Property)* for a period of seven years commencing on the 29th February 2020 with the Plaintiff paying to the Defendant USD \$ 12,000 as rent for six months.

However, this was subsequently frustrated when the Defendant did not notify

25 the Plaintiff/Respondent that the property was the subject of a dispute and the matter was in court. As a result, the lease agreement was not signed and the Respondent suffered damages.

It should be noted that at this stage, the court is limited on its findings regarding the success of the case on its merits. The court cannot investigate fully the

30 merits of the case but rather assesses the probability of its success. In other words, the claim must not be a sham.

- 5 This court has observed that there is nothing on the court record that speaks of a contract between the parties. However, from the written statement of defense, the Applicant admits that there was an agreement regarding the payment of rent for the property to the tune of USD \$ 2000 per month for seven years. That the Plaintiff had a long list of renovations she needed to be made on the property - 10 and at her expense which made the continuation of the lease transaction untenable in the absence of a comprehensive lease agreement.

My understanding from the pleadings is that the parties had an arrangement to rent out the property although it is not stipulated that any formal arrangement had been arrived at. Whether this amounted to a contract that raises question of

15 breach and liability is a question that shall be determined by the Court at the hearing of the main suit not this Application.

It is my finding thus that the suit is not frivolous and vexatious as alleged by the Applicant.

The second test is that the Applicant/Defendant has a good defense that is 20 likely to succeed.

The Defendant/Applicant contends in his written statement of defense that the property is registered in the name of S & M Holdings Ltd and attached the Certificate of title to the property. Counsel for the Applicant submitted that the intended lease agreement was to be executed between M/s S & M Holdings Ltd

25 and the Respondent.

Indeed, it is true that the registered proprietor of the Property is S & M Holdings Ltd. The intended lease agreement as well was to be between the Plaintiff/Respondent and S & M Holdings Ltd. It is not justified why the Plaintiff/Respondent chose to sue the Applicant/Defendant. I am therefore of the

30 opinion that the defendant's defence is a good one and is likely to succeed.

- 5 Lastly, the Court would have ordered for security of costs on that basis alone but, I have observed that the current Application is predominantly based on the Respondent's inability to pay because she is a foreign resident and has no assets to satisfy the Decree if the Defendant succeeds in the main suit. In the case of *Noble Builders (U) Ltd and another Versus Jabal Singh Sandhu (supra),* the - 10 Court ordered further security for costs based on the Respondent being a resident of Canada and not having assets in Uganda. In the instant case and according to the Record, the Respondent is a Jamaican citizen who resides in Tanzania. The major concern of the Applicant is that the Respondent is not only a foreigner not resident in Uganda but also has no known assets in Uganda. - 15 Should the Defendant end up being the successful party in the main suit, he may not be able to recover his costs against the Respondent.

For the reasons given above, the Application is allowed and costs shall be in the cause.

Dated and signed at Kampala this 2nd day of May 2024.

Harriet Grace MAGALA

Judge

Delivered online (EECMIS) this 07 th Day of May 2024.