Roko Construction Uganda Limited v Mantrac Uganda Limited (Miscellaneous Application 2438 of 2023) [2024] UGCommC 126 (6 May 2024)

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION)

MISC. APPLICATION NO. 2438 OF 2023

ARISING FROM CIVIL SUIT NO. 1161 OF 2023

ROKO CONSTRUCTION

UGANDA LIMITED::::::::::::::::::::::::::::::::::::

VERSUS

MANTRAC UGANDA LIMITED::::::::::::::::::::::::::::::::::::

Before Hon. Lady Justice Patricia Kahigi Asiimwe

Ruling

Introduction

- This Application was brought under section 33 of the $1.$ Judicature Act, Section 98 of the Civil Procedure Act Cap 71, Order 36 Rules 3 & 4, and Order 52 Rules 1& 2 of the Civil Procedure Rules SI 71-1. - The Applicant filed this Application seeking orders for grant of $2.$ unconditional leave to appear and defend Civil Suit No. 1161 of 2023 and the costs of the Application. - 3. The grounds of the Application are laid down in the Notice of Motion and in the Affidavit in Support deponed by Mark Koehler, the director of the Applicant. He stated that: - a) He is not indebted to the tune claimed. - b) The Applicant purchased generators from the Respondent. When the Respondent claimed for the recovery of the sum that was already paid the managing director opted to carry out a reconciliation. - c) The reconciliation was frustrated by the Respondent by failing to provide LPOs, delivery notes and the payment receipts to facilitate the reconciliation.

$\mathbf{A}$

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- d) To the Applicant's shock the Respondent produced a document that was purportedly entered into by the Applicant as a debt settlement agreement. The alleged document was signed by a person who had no authority and locus to sign it because he was not the managing director of the company. - e) The following day, an insolvency petition was instituted against the Applicant for inability to pay its debts, thereby frustrating the alleged agreement and making it more impossible to be performed because all the powers to perform any contract by any officer of the company were taken away by the said petition. - f) The said petition was determined in September $2022$ which meant the alleged contract could not be performed before that time and was frustrated. - 4. The Respondent filed an Affidavit in Reply deponed by Esther Amuna, the finance manager of the Respondent in which she stated that: - a) The Applicant has never fully paid for the generators. The Applicant only paid USD 35,000 leaving an outstanding balance of USD 93,619.98. - b) The Applicant wrote to the Respondent on 9^th July 2020 requesting the Respondent to withdraw the statutory demand issued. The Applicant also acknowledged a debt of USD 73,742.4. The Applicant also provided a payment plan and the deponent in the Affidavit in Support of the notice of motion signed the letter as managing director of the Applicant. - c) The debt settlement agreement was signed by the director of the Respondent, and it was affirmed by the then legal manager/ company secretary of the Respondent. - d) The person who signed the debt settlement agreement was a director of the applicant and as a director he has the power to bind the company and further the same


director and managing director signed the acknowledgment of the debt of USD 73,742.4 in response to the statutory demand issued on $7^th$ July 2023.

- e) The Applicant proceeded and made the first installment of USD 11,700 to show that they agreed to the debt. - f) The Applicant raises no triable issue or defense to the suit.

Representation

The Applicant was represented by $M/S$ Newmark Advocates, 5. and the Respondent was represented by Orima & Co. Advocates.

Issue

Whether the Applicants should be granted unconditional leave 6. to appear and defend Civil Suit No. 1161 of 2023

Resolution

Both parties filed written submissions which I have taken into $7.$ consideration in resolving this matter. The principles for granting an application for leave to appear and defend are stipulated in the case of Maluku Interglobal Trade Agency V Bank of Uganda [1985] HCB 65. In that case, the 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 Plaintiff is not entitled to summary judgment. 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.*

In the case of Geoffrey Gatete and Another v William Kyobe 8. Civil Appeal No 7 of 2005, the Supreme Court held that Order 36 Rule 11 gives the court very wide discretion to grant leave if is satisfied either that service of the summons was not effective; or that there is any other good cause.

- 9. The learned Justices further held that "Apart from ineffective service of summons, what the courts have consistently held to amount to good cause is evidence that the defendant has a triable defence to the suit." - 10. The Applicant's defences are that the Applicant is not indebted to the tune claimed, the debt settlement agreement was signed by an unauthorized person, and that the agreement was frustrated and affected by force majeure. - 11. The Respondent attached to the Affidavit in Reply a letter dated 9^th July 2020 from the Applicant to the Respondent in which the Applicant admits that the money owed is USD. 73,742.4 and proposes a payment settlement plan. The letter is signed by Mark Koehler, Managing Director, and Willie Swanepoel, Director. - 12. The Respondent's claim under the Civil Suit is for USD. 134,855.95, the Applicant in the letter referred to above acknowledges a debt of USD. 73,742.4 and under the debt settlement agreement the outstanding balance is USD. 128,619.98. There is therefore a dispute as to how much money is owed to the Respondent and there is therefore need for reconciliation of accounts. As was held in the case of Asea Georges Aswa V Housing Finance Bank Ltd MA No.952 of 2020, a reconciliation process can only be undertaken through the trial process and not through issuing summary judgment. - 13. In the case of Postal Corporation of Kenya vs. Inamdar & 2 Others [2004] 1 KLR 359 court held as follows:

The lau) is now well settled that if the defence filed by a defendant raises euen one bona fide triable issue, then the defendant must be giuen leaue to defend.

- 14. In light of the above, I have not deemed it necessary to delve into the assessment of the other defences raised by the Applicant since as discussed above I have found that there is already one triable issue. - 15. Therefore, the Application for leave to appear and defend Civil Suit No. 1 161 of 2023 is hereby granted on the following terms: - a) The Applicant shall file its written statement of defence within 15 days from the date of this Ruling; and - b) Costs shall follow the cause.

Dated this 6th day of ]|ttr,ay 2o24

dk:

Patricla Ikhigi Asiimwe

Judge

Delivered on ECCMIS