[2024] UGHCCD 139

## **THE REPUBLIC OF UGANDA**

# **IN THE HIGH COURT OF UGANDA AT KAMPALA CIVIL DIVISION MISCELLANEOUS APPLICATION NO. 111 of 2023**

## **[Arising from CIVIL SUIT NO.336 OF 2023]**

### **1. IMAGING THE WORLS AFRICA (ITWA) LTD**

**2. KRISTEN DESTIGTER::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANTS**

#### **VERSUS**

## **JULIET NAGAWA LUGGYA T/A NAGAWA LUGGYA & CO ADVOCATES::::::: RESPONDENT**

#### **BEFORE: HON. JUSTICE SSEKAANA MUSA**

### **RULING**

The applicant brought this application under Order 36 rules 3 & 4, O.52 rules 1 & 3 of the CPR. He sought for orders that this court grants unconditional leave to appear and defend Civil Suit No. 336 of 2023 and costs of the application be provided for.

The application was supported by the affidavit of the applicant; **PICHO SHADRACK**.

The facts leading to this Application are that the Applicants engaged the services of the 1st respondent to incorporate a company which the respondent duly incorporated with the 2nd applicant as a shareholder in the said company. The 1st applicant entered into a retainer agreement with the respondent to provide legal services as an external lawyer at a monthly retainer fee of \$1000.

The respondent continued to work together with the applicants after the said one-year period until it was terminated in May 2023. At the termination the respondent's fees stood at \$19,000.

The Respondents aggrieved by the actions of the Applicants, filed a summary suit vide civil suit No. 336 of 202319, claiming payment of the US\$ 19,000 being the outstanding retainer fees

In response to the above, the Applicant has filled this application for unconditional leave to appear and defend the suit.

The grounds of the application set out in the Notice of Motion are as follows:

- That the Applicants are not indebted to the Respondent. - The applicant have a good and plausible defence to the above suit which can be settled by way of a hearing at full trial. - The applicants shall file a counterclaim to plead fraud, professional negligence and connivance between the applicant and the 1st applicant's former Operations Manager, a One Collins Owani.

The applicants in their affidavit in support made general denial of everything and contended that the 1st respondent connived with the staff of the 1st respondent. The applicants are introducing another company incorporated which they allege to have been fraudulently incorporated.

The applicants made a payment of \$7000 allegedly upon being convinced by Collins Owani Frank and the respondent received the partial payment and in their opinion was for no work done and that the said retainer agreement was never shared with the 2nd applicant.

He additionally attached the receipts to justify settlement against rent obligation for previous months and payment of all utilities bills.

According to the Applicant after referring to the law and the facts disclosed in the Applicant's application and supporting evidence, the Applicant raises the following triable issues namely:

- *1. Whether the Applicants have by Affidavit disclosed a triable issue of fact or law.* - *2. Whether the 2nd applicant can be sued in her capacity as a director for the acts of the 1st defendant.*

The applicants were represented by *Oyet Patrick* while the respondent was represented by *Mahagwa Brenda.* The parties filed written submissions which I have perused and considered in this ruling.

## *Determination*

*Whether the applicants have by affidavit disclosed a triable issue of fact or law?* The applicant's counsel argued that the defendant/applicant is not indebted to the respondent and therefore the plaintiff has no cause of action which in his view is both a triable issue of law and fact. The applicant contended further that the applicants have a non-derogable right to be heard on their defence and counterclaim in professional negligence.

The respondent's counsel submitted that the applicant concedes that by email from the 2nd applicant to the respondent dated 6th May 2023 engaged the services of the respondent through a retainer relationship between them. The 2nd applicant affirmed that affirmed that the Owani Collins was representing both the applicant and herself in her individual capacity.

The applicants have tried to introduce another company into the demand for payment under retainer and yet the two transactions are separate. The incorporation of ITW CHERI Ltd was never part of the retainer arrangement and therefore not part of the breach of contract by the applicants.

### *Analysis*

The plaintiff in summary suit is entitled to summary judgment on liability if there is no issue which can be truly disputed and no other reason why there should be a trial.

The foundation for applications for leave to appear and defend is premised under order 36 rules 3 and 4 of the civil Procedure Rules which provides that upon the filing of an endorsed plaint and consequent service on the defendant, the defendant shall not appear and defend the suit except upon applying for and obtaining leave from court.

Order 36 rule 4 o the CPR further provides that the application for leave to appear and defend the suit shall be supported by affidavit which shall state whether the defence alleged goes to the whole or to part only and if so to what part of the plaintiff's claim.

The above provisions are premised on the fact that the plaintiff has failed to establish a prima facie case for summary judgment and thus the summary judgment should not be granted or entered. The defendant (applicant) is required to satisfy the court that *"there is an issue or question in dispute which ought to be tried or that there ought for some other reason to be a trial"*

The settled law is that for an application for leave to defend to be granted, the applicants has to show that there is a bonafide triable issue of fact or law that he/she will advance in defense of the suit. In the case of *Maluku Interglobal Trade Agency vs Bank of Uganda [1985] HCB 65, at 66* while considering the above rule 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 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 *Bunjo vs KCB (Uganda) Ltd (Misc. Application No. 174 of 2014)* while considering the same principle court held that;

*"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 vs Nyali Beach Hotel Ltd [1995-1998], EA7 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".*

If the applicant raises a triable issue or if there is a good reason why there should be a trial, he will be given unconditional leave to defend. If he is not able to show that there is a triable issue or cannot satisfy the court why the case should be tried, then the plaintiff will be granted a summary judgment. *See Rankine Bernadatte Adeline v Chenet Finance Ltd [2011] 3 SLR 756; PM Credit Opportunities Fund v Tantoo Tiny [2011]3 SLR 1021*

The applicant does not need to satisfy the court that he is more likely to succeed on the issue or question. He/she merely has to satisfy the court that there is a question or issue which can only be properly determined at a proper trial. It is not for the court hearing the application to determine or investigate the merits of the issues raised by the applicant. The court should only ascertain whether an issue has been raised which should be tried. The duty of the court is to carefully examine the facts in order to ascertain whether there is truly a triable issue.

The power to give a summary judgment in intended only to apply to cases where there is no reasonable doubt that a plaintiff is entitled to judgment, and where it is inexpedient to allow a defendant to defend for mere purposes of delay. The courts should be robust in their approach to applications for leave to defend by carefully scrutinizing defences to ensure that the respondent/plaintiff is not improperly deprived of a judgment in commercial transactions 'where cash flow is the lifeblood to make commerce

## work'. *See Habibullah Mohamed Yousuff v Indian Bank [1999] 2 SLR (R) 880; MP-Bilt Pte Ltd v Oey Widarto [1999]1 SLR (R) 908*

In the instant case, the respondent submits that the suit does not raise any triable issues of law or fact and it's just an attempt to waste court's time. The applicants through the deponent made general denial of liability or indebtedness by contending that the retainer agreement was obtained by fraud or is a forgery. I find this version quite unbelievable and merely a denial of facts which is contrary to the email communications between the respondent and the 2nd applicant.

The applicants' counsel has tried to hoodwink court in his alleged defence by contending that they have a counter-claim where they intend to plead a counterclaim for fraud, for professional negligence and connivance the respondent, Juliet Nagawa Luggya and 1st respondent's former Operations Manager, a one Collins Owani.

In the affidavit in support of the application, the applicant is 'blowing hot and cold' on the facts by admitting to the retainer agreement but at the same time denying its existence. The applicants made a part payment under the retainer agreement, which the applicant's counsel contended was paid for no work done. The applicant's counsel should appreciate better how a retainer agreement of advocates operates.

In my view, the applicants have not demonstrated that they have a defence to the claim that is brought under summary procedure. The applicants are at liberty to file their intended counter-claim as a separate suit since it never related to the retainer agreement. They can sustain their alleged professional negligence as an independent of the claim.

It is not enough to come to court denying ostensible authority of the company employees who at all material times executed contracts on behalf of the company. The 'indoor management rule' would come in handy to save outsiders like the respondent when the applicant wants to deny liability.

The applicants defence are not bonafide and summary proceedings are intended to claim of this nature where there can be no reasonable doubt that the plaintiff is entitled to judgment and it is inexpedient to allow the defendants to defend for mere purposes of delay. Mere denials cannot be bonafide to warrant a trial since the alleged defence is hopelessly created with the sole intention of delay in the court system. The purpose of summary judgment is to eliminate delays in an action filed by a party so that they can enjoy the fruits which are due to them.

The applicants' defence or denials have been ably responded to in the affidavit in reply and this has left the allegations of fact hanging without any root to hang on. Mere general denial that the defendant is not indebted will not suffice unless the grounds relied on are stated and the real nature of the defence must be stated

This application fails since there is no triable issue or question and the same is dismissed with costs. Therefore, judgement is entered for the respondent/plaintiff.

I so Order

*Ssekaana Musa Judge 30th August 2024*