Shell Kasese Services Ltd and Ors v The Cooperative Bank Ltd - (HTC-00-CC-MA 317 of 2005) [2005] UGCommC 23 (18 May 2005)

{\rtf1\ansi\ansicpg1252\uc1\deff0\stshfdbch0\stshfloch0\stshfhich0\stshfbi0\deflang1033\deflangfe1033{\fonttbl{\f0\froman\fcharset0\fprq2{\*\panose 02020603050405020304}Times New Roman;}{\f36\fswiss\fcharset0\fprq2{\*\panose 020b0604030504040204}Tahoma;} {\f37\froman\fcharset238\fprq2 Times New Roman CE;}{\f38\froman\fcharset204\fprq2 Times New Roman Cyr;}{\f40\froman\fcharset161\fprq2 Times New Roman Greek;}{\f41\froman\fcharset162\fprq2 Times New Roman Tur;} {\f42\froman\fcharset177\fprq2 Times New Roman (Hebrew);}{\f43\froman\fcharset178\fprq2 Times New Roman (Arabic);}{\f44\froman\fcharset186\fprq2 Times New Roman Baltic;}{\f45\froman\fcharset163\fprq2 Times New Roman (Vietnamese);} {\f397\fswiss\fcharset238\fprq2 Tahoma CE;}{\f398\fswiss\fcharset204\fprq2 Tahoma Cyr;}{\f400\fswiss\fcharset161\fprq2 Tahoma Greek;}{\f401\fswiss\fcharset162\fprq2 Tahoma Tur;}{\f402\fswiss\fcharset177\fprq2 Tahoma (Hebrew);} {\f403\fswiss\fcharset178\fprq2 Tahoma (Arabic);}{\f404\fswiss\fcharset186\fprq2 Tahoma Baltic;}{\f405\fswiss\fcharset163\fprq2 Tahoma (Vietnamese);}{\f406\fswiss\fcharset222\fprq2 Tahoma

(Thai);}}{\colortbl;\red0\green0\blue0;\red0\green0\blue255; \red0\green255\blue255;\red0\green255\blue0;\red255\green0\blue255;\red255\green0\blue0;\red255\green255\blue0;\red255\green255\blue255;\red0\green0\blue128;\red0\green128\blue128;\red0\green128\blue0;\red128\green0\blue128;\red128\green0\blue0; \red128\green128\blue0;\red128\green128\blue128;\red192\green192\blue192;}{\stylesheet{\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs24\lang1024\langfe1024\cgrid\noproof\langnp2057\langfenp1033 \snext0 Normal;}{\*\cs10 \additive \ssemihidden Default Paragraph Font;}{\*\ts11\tsrowd\trftsWidthB3\trpaddl108\trpaddr108\trpaddfl3\trpaddft3\trpaddfb3\trpaddfr3\tscellwidthfts0\tsvertalt\tsbrdrt\tsbrdrl\tsbrdrb\tsbrdrr\tsbrdrdgl\tsbrdrdgr\tsbrdrh\tsbrdrv \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1024\langfe1024\cgrid\langnp1024\langfenp1024 \snext11 \ssemihidden Normal Table;}{\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \f36\fs16\lang1024\langfe1024\cgrid\noproof\langnp2057\langfenp1033 \sbasedon0 \snext15 \ssemihidden \styrsid4854711 Balloon

Text;}}{\*\latentstyles\lsdstimax156\lsdlockeddef0}{\*\listtable{\list\listtemplateid1228286630\listhybrid{\listlevel\levelnfc0 \levelnfcn0\leveljc0\leveljcn0\levelfollow0\levelstartat1\levelspace360\levelindent0{\leveltext\leveltemplateid67698703\'02\'00.;}{\levelnumbers\'01;}\fi-360\li720\jclisttab\tx720\lin720 }{\listlevel\levelnfc4\levelnfcn4\leveljc0\leveljcn0\levelfollow0 \levelstartat1\levelspace360\levelindent0{\leveltext\leveltemplateid67698713\'02\'01.;}{\levelnumbers\'01;}\fi-360\li1440\jclisttab\tx1440\lin1440 }{\listlevel\levelnfc2\levelnfcn2\leveljc2\leveljcn2\levelfollow0\levelstartat1\levelspace360\levelindent0 {\leveltext\leveltemplateid67698715\'02\'02.;}{\levelnumbers\'01;}\fi-180\li2160\jclisttab\tx2160\lin2160 }{\listlevel\levelnfc0\levelnfcn0\leveljc0\leveljcn0\levelfollow0\levelstartat1\levelspace360\levelindent0{\leveltext\leveltemplateid67698703 \'02\'03.;}{\levelnumbers\'01;}\fi-360\li2880\jclisttab\tx2880\lin2880 }{\listlevel\levelnfc4\levelnfcn4\leveljc0\leveljcn0\levelfollow0\levelstartat1\levelspace360\levelindent0{\leveltext\leveltemplateid67698713\'02\'04.;}{\levelnumbers\'01;} \fi-360\li3600\jclisttab\tx3600\lin3600 }{\listlevel\levelnfc2\levelnfcn2\leveljc2\leveljcn2\levelfollow0\levelstartat1\levelspace360\levelindent0{\leveltext\leveltemplateid67698715\'02\'05.;}{\levelnumbers\'01;}\fi-180\li4320\jclisttab\tx4320\lin4320

} {\listlevel\levelnfc0\levelnfcn0\leveljc0\leveljcn0\levelfollow0\levelstartat1\levelspace360\levelindent0{\leveltext\leveltemplateid67698703\'02\'06.;}{\levelnumbers\'01;}\fi-360\li5040\jclisttab\tx5040\lin5040 }{\listlevel\levelnfc4\levelnfcn4\leveljc0 \leveljcn0\levelfollow0\levelstartat1\levelspace360\levelindent0{\leveltext\leveltemplateid67698713\'02\'07.;}{\levelnumbers\'01;}\fi-360\li5760\jclisttab\tx5760\lin5760 }{\listlevel\levelnfc2\levelnfcn2\leveljc2\leveljcn2\levelfollow0\levelstartat1 \levelspace360\levelindent0{\leveltext\leveltemplateid67698715\'02\'08.;}{\levelnumbers\'01;}\fi-180\li6480\jclisttab\tx6480\lin6480 }{\listname ;}\listid1503354683}}{\*\listoverridetable{\listoverride\listid1503354683\listoverridecount0\ls1}} {\*\rsidtbl \rsid3689822\rsid4195796\rsid4594768\rsid4854711\rsid5601963\rsid6452746\rsid8609514\rsid9967414\rsid11607666\rsid12259043\rsid12287420\rsid12345420}{\*\generator Microsoft Word 11.0.6568;}{\info{\title THE REPUBLIC OF UGANDA} {\author Egonda-Ntende}{\operator Harry Mak}{\creatim\yr2006\mo2\dy7\hr10\min14}{\revtim\yr2006\mo2\dy7\hr10\min14}{\printim\yr2005\mo5\dy17\hr10\min52}{\version2}{\edmins0}{\nofpages3}{\nofwords579}{\nofchars3302}{\*\company Courts of

Judicature} {\nofcharsws3874}{\vern24579}}\widowctrl\ftnbj\aenddoc\noxlattoyen\expshrtn\noultrlspc\dntblnsbdb\nospaceforul\formshade\horzdoc\dgmargin\dghspace180\dgvspace180\dghorigin1800\dgvorigin1440\dghshow1\dgvshow1 \jexpand\viewkind1\viewscale100\pgbrdrhead\pgbrdrfoot\splytwnine\ftnlytwnine\htmautsp\nolnhtadjtbl\useltbaln\alntblind\lytcalctblwd\lyttblrtgr\lnbrkrule\nobrkwrptbl\snaptogridincell\allowfieldendsel\wrppunct \asianbrkrule\rsidroot12345420\newtblstyruls\nogrowautofit \fet0\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sftnbj {\*\pnseclvl1\pnucrm\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl2\pnucltr\pnstart1\pnindent720\pnhang {\pntxta .}} {\*\pnseclvl3\pndec\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl4\pnlcltr\pnstart1\pnindent720\pnhang {\pntxta )}}{\*\pnseclvl5\pndec\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl6\pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (} {\pntxta )}}{\*\pnseclvl7\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl8\pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl9\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}\pard\plain \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6452746 \fs24\lang1024\langfe1024\cgrid\noproof\langnp2057\langfenp1033 {\b\insrsid12345420\charrsid6452746 THE REPUBLIC OF

UGANDA}{\b\insrsid4594768\charrsid6452746 \par }{\b\insrsid12345420\charrsid6452746 \par HIGH COURT OF UGANDA AT KAMPALA \par \par COMMERCIAL COURT DIVISION \par \par HTC-00-CC-MA-317-2005 \par \par (Arising from HCT-00-CC-CS-0140-2005) \par \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\b\insrsid12345420\charrsid6452746 SHELL KASESE SERVICES LTD }{\b\insrsid11607666 }{ \b\insrsid12345420\charrsid6452746 APPLICANTS \par J}{\b\insrsid11607666 .}{\b\insrsid12345420\charrsid6452746 W}{\b\insrsid11607666 .}{\b\insrsid12345420\charrsid6452746 K}{\b\insrsid11607666 .}{\b\insrsid12345420\charrsid6452746 BYAKWAGA \par COLLIN BYAKWAGA \par \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6452746 {\b\insrsid12345420\charrsid6452746 VERSUS \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\b\insrsid12345420\charrsid6452746 \par THE COOPERATIVE BANK LTD }{\b\insrsid11607666 }{\b\insrsid12345420\charrsid6452746 RESPONDENT \par (In Liquidation) \par \par \par \par }{\b\ul\insrsid12345420\charrsid11607666 BEFORE: THE HONOURABLE MR. JUSTICE F}{\b\ul\insrsid11607666\charrsid11607666 .}{\b\ul\insrsid12345420\charrsid11607666 M}{\b\ul\insrsid11607666\charrsid11607666 .}{\b\ul\insrsid12345420\charrsid11607666 S}{ \b\ul\insrsid11607666\charrsid11607666

.}{\b\ul\insrsid12345420\charrsid11607666 EGONDA-NTENDE \par \par RULING \par }{\insrsid12345420 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid6452746 \hich\af0\dbch\af0\loch\f0 1.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid5601963 { \insrsid6452746 The applicants are seeking unconditional leave to appear and defend the main suit and that costs of this application abide the main suit. The application is brought by notice of motion with the affidavit of Applicant No. 2 in support thereof. The main ground of this application is that the applicants intend to file a cross action against the respondents for having sold the security provided to the respondent at an undervalue, far below its market value, whereas its worth should have satisfied the respondents claim against the applicants. }{\insrsid12345420

\par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid6452746 \hich\af0\dbch\af0\loch\f0 2.\tab}}{\insrsid6452746 The Respondent opposed this application, filing an affidavit in reply sworn by Mr. Ben Sekabira, }{\insrsid9967414 an }{ \insrsid6452746 agent of the respondent.}{\insrsid9967414 The Respondents deny that the security to the loan was sold at an undervalue. \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid9967414 \hich\af0\dbch\af0\loch\f0 3.\tab}Mr. Benard Bamwine, learned counsel for the applicant submitted that the sec urity of the applicant was sold at Shs82,000,000.00 which was an undervalue, given that }{\insrsid4854711 the }{\insrsid9967414 1997 valuation of the said property had put its value at over Shs500,000,000.00. The valuation of the responsents put the market value of the security at Shs132,000 ,000.00 which was so out of range with the 1997 value. The applicants valuation report records the built up area to be 1462 square metres wheras the respondent valuation records the built up area as slighly over 1000 square metres. This raises a triable i ssue for which the applicants should be gran}{\insrsid4854711 t}{\insrsid9967414 ed unconditional leave to appear to defend. \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid9967414 \hich\af0\dbch\af0\loch\f0 4.\tab}Mr. Mathias Sekatawa, learned

counsel for the Respondent, submitted that }{\insrsid4195796 this application raised no triable issue. The question of whether the sale of the security was at an undervalue is matter that can only be tried in a separate action for damages. This must be brought by originating summons only. Secondly Mr. Sekatawa argued that admission had been made of the amount owing to the Respondent from the applicants. If l eave were to be granted it should be conditional upon payment of the amount admitted.}{\insrsid9967414 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid12287420 \hich\af0\dbch\af0\loch\f0 5.\tab}}{\insrsid12287420 No authority has been drawn to my attention that bars the bringing of a cross action against the plaintiff in respect of damages for selling property as security at an und ervalue. The applicant has argued that had the respondent acted properly, the sale of the security would have resulted in payment of the whole outstanding debt to the plaintiiff/respondent. Each party has submitted a valuation report of the security in qu e stion, and it is clear that there is a conflict between the two reports on both the market value of the security and consqeuntly the forced sale value, and on the area of the built up areas of the security. The difference in the bult up area is approximat ely 0.344 Square Metres.}{\insrsid4195796 \par

{\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid12287420 \hich\af0\dbch\af0\loch\f0 6.\tab}}{\insrsid12287420 I am satisified that triable issues are raised upon these matters which cannot be resolved without a trial. And indeed the question of whether the respondent in selling the security did so at a reasonable price is one that can onl y be settled after a trial of all issues connected thereto. As it is contended that the sale ought to have realised the outstanding amount, and more, there exists a cross action that would offset the whole of the plaintiffs claim. \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid12287420 \hich\af0\dbch\af0\loch\f0 7.\tab}In the circumstances I will a}{\insrsid3689822 llow the applicant\rquote s application for unconditional leave to appear and defend the main suit. The written statement of defence shall be filed within 10 days from the date hereof. Costs shall abide the outcome of the main suit.}{\insrsid12287420 \par }\pard \ql \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5601963 {\insrsid3689822 Dated at Kampala this 18}{\super\insrsid3689822\charrsid3689822 th}{\insrsid3689822 May 2005 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid3689822 {\insrsid3689822 \par \par \par \par \par FMS Egonda-Ntende \par Judge \par }}