[2024] UGCommC 207

## THE REPUBLIC OF UGANDA

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

# **MISCELLANEOUS APPLICATION NO. 0648 OF 2024** (ARISING FROM CIVIL SUIT NO. 0224 OF 2024)

## MUGASHA ARNOLD :::::::::::::::::::::::::::::::::::: **VERSUS**

## TOTAL ENERGIES MARKETING UGANDA LTD :::::::::::::::::::::::::::::::::::

## (Before: Hon. Justice Patricia Mutesi)

#### **RULING**

#### **Background**

The Applicant brought this application by notice of motion under Section 33 of the Judicature Act, Section 98 of the Civil Procedure Act and Order 36 Rule 4 and Order 52 Rules 1, 2 and 3 of the Civil Procedure Rules seeking orders that:

- 1. The Applicant be granted leave to appear and defend Civil Suit No. 0224 of 2024. - 2. Costs of this application be provided for.

Briefly, the grounds of this application are that:

- 1. The Respondent's claim in Civil Suit No. 0224 of 2024 (hereinafter "the main suit") is unliquidated in nature and cannot be effectually determined by way of a summary suit. - 2. The Applicant has a bonafide, triable and meritorious defence to the claim in the main suit. - 3. The Applicant disputes the amount being claimed by the Respondent by reason of fuel card fraud orchestrated by the Respondent or its agents. - 4. The Applicant shall suffer serious loss or damages if leave to appear and defend is not granted. - 5. It is just, fair and equitable for this application to be granted.

The application is supported by an affidavit sworn by the Applicant. He stated that on 28^th May 2019, he entered into a Marketing License Agreement with the

Respondent for the sale and supply of the latter's petroleum products. It is the trade practice of the Respondent to create a trading account wherein money is deposited by the licensee for petroleum products to be supplied. That account is, accordingly, is debited by the Respondent as and when petroleum products are supplied.

He explained that, by way of illustration, fuel station "A" would open a trading account with the Respondent on which it would deposit a sum of money known as working capital. Upon supply of petroleum products, the account is debited accordingly. In the case of sale of fuel to the customer using a "Total Fuel Card", the trading account is credited to a sum equivalent to the petroleum product supplied to the customer as the customer would not have paid cash to consume fuel at the fuel station.

He stated that subsequently, it was discovered by the Respondent that some of its employees had fraudulently acquired Total Fuel Cards. It was also discovered that these duplicated cards were obtained from the Respondent's Head Office. This fraud was brought to the attention of the Respondent's Audit Manager. Following a number of meetings, the Respondent agreed to settle the damage in two equal instalments. However, the Respondent only paid one instalment, leaving an outstanding amount.

The Applicant finally stated that he later realised that money had been debited from his trading account. When he lodged a complaint to the Respondent, it was found that the fraudulently-acquired cards had been used to consume fuel of UGX 58,970,000 and that his sum had been debited by the Respondent from his trading account without his knowledge. Further that the Respondent, in addition to the illegalities, debited money from his trading account which was not part of the Marketing Agreement. These debits include the illegal deduction of optimisation fees, along with other charges not covered under the agreement. These actions of the Respondent give rise to a good and genuine defence to the main suit.

The Respondent opposed the application through an affidavit in reply sworn by Ms. Asiimwe Rachel, its Retail Sales Manager. She noted that the Applicant confirmed that on 28^th May 2019, he executed a contract with the Respondent for the supply of the latter's fuel petroleum products. She clarified that trading accounts were opened for the smooth operation of the contract and that Total Fuel Cards were used by the customers upon sale of fuel. She contended that as per the contract, the responsibility for all fraudulent transactions at the fuel station falls onto the Applicant and that the Respondent is not responsible for any fraud as alleged by the Applicant. Finally, she confirmed that all deductions made on the Applicant's trading accounts were lawful as per the contract.

The Applicant swore and filed an affidavit in rejoinder to the affidavit in reply in which he reiterated his earlier claim that the fraudulent transactions took place at the Respondent's headquarters at the hands of the Respondent's employees and / or agents, and not at the fuel station. He reiterated that the Respondent acknowledged the fraud and even reimbursed part of the money taken by the fraudsters to the Applicant. He affirmed that the Respondent illegally deducted sums of money not agreed upon by the parties in the licensing agreement. He also reiterated that he has a good defence showing fraudulent transactions and illegal deductions orchestrated by the Respondent which requires the main suit to be heard on its merits.

### **Issues arising**

Whether the Applicant has a bonafide defence which raises a triable issue in the Civil Suit No. 0224 of 2024.

## **Representation and hearing**

At the hearing, Mr. Edgar Ayebazibwe of Mwesigwa Rukutana & Co. Advocates appeared for the Applicant while Ms. Angella Twebaze of Kalikumutima & Co. Advocates appeared for the Respondent. Both counsel argued the application through written submissions. I have carefully considered those submissions, the authorities cited therein and all the other materials on the Court record.

### Determination of the issue

## Whether the Applicant has a bonafide defence which raises a triable issue in the Civil Suit No. 0224 of 2024.

This application is brought under Order 36 Rule 4 of the Civil Procedure Rules for leave to appear and defend the main suit. In Post Bank (U) Ltd v Abdu Ssozi, SCCA No. 08 of 2015, the Supreme Court explained that Order 36 was enacted to facilitate the expeditious disposal of cases involving debts and contracts of a commercial nature by preventing defendants from raising frivolous or vexatious

defences in order to unreasonably prolong litigation. Apart from assisting the courts in disposing of cases expeditiously, Order 36 also helps the economy by removing unnecessary obstructions in financial or commercial dealings.

Accordingly, summary procedure is reserved for only straightforward cases in which the demand is liquidated and where there are no points for the Court to try. Claims in summary procedure should be so clear that they can adequately be proved through affidavit evidence without a trial. (See Negalambire Faruku & 2 Ors v Woira Brian, HCMA No. 1145 of 2020). In any application of this nature, it is incumbent upon the applicant to present a plausible defence. In Maluku Integlobal Trade Agency v Bank of Uganda [1985] HCB 65, it was 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. Where 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 is 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 ..." Emphasis mine.

Having fully considered this application, it is my considered opinion that there is a triable issue of law and fact in the main suit. It is an agreed fact that the Applicant and the Respondent entered into a Marketing Licence Agreement in which the Applicant was appointed as a dealer of the Respondent's petroleum products at his petrol station located at Plot 1468, Ggaba Road known as Total Energies Ggaba Service Station. The specially endorsed plaint in the main suit was drawn for recovery of UGX 99,239,940. Therein, the Respondent claims that it supplied petroleum products to the Applicant on credit and that the sum of UGX 99,239,940 remains outstanding from him.

In his supporting affidavit, the Applicant averred that during the pendency of the Marketing Licensing Agreement, some of the Respondent's employees or agents duplicated fuel cards at the Respondent's head office and used them to consume fuel at his fuel station. This caused financial loss to him to the tune of UGX 58,970,000. Furthermore, the Applicant has asserted that the Respondent acknowledged this fraud, agreed to reimburse the Applicant in two instalments

and even effected payment of one of the instalments. The Applicant has also alleged that the Respondent made illegal deductions from his trading account during the pendency of the Agreement.

The Respondent's Retail Sales Manager, in her affidavit in reply, averred that it is the Applicant who is responsible for any fraud that may have occurred at his fuel station in the course of the contract period. However she did not point out which provision of the Marketing License Agreement ascribes all fraud at the fuel station to the Applicant. I have also examined the copy of the Marketing License Agreement which was annexed to the affidavit in reply as Annexure A. I have not found any express provision therein stipulating that any and all fraud occurring at the fuel station is the responsibility of the Applicant.

However, even if the parties had anticipated in the Marketing License Agreement, that the dealer (Applicant) would bear any and all the liability for the fraud that could occur at the fuel station, the Respondent's Fuel Card system (in which the dealer supplies fuel to a customer at the fuel station on the basis of a fuel card issued by the Respondent in the hope of getting subsequent reimbursement from the Respondent) would render such a provision illogical. If a card is issued fraudulently by the Respondent through connivance of its employees or agents, as it is alleged to have happened in this case, the dealer would be left vulnerable to loss with no recourse. It would simply be unreasonable for the Respondent to bear no liability for a fraud perpetrated by its employees in the Fuel Card System to the detriment of a dealer.

It is therefore my considered decision that the Applicant should appear and defend the main suit so that his allegations of fraud against the Respondent are fully investigated before the sum claimed in the plaint can be awarded to the Respondent. To this end, this application has disclosed a triable issue in the main suit relating to the existence and quantum of the claimed debt.

Consequently, this application succeeds and I make the following orders:

- i. This application is hereby allowed. - ii. The Applicant is granted unconditional leave to appear and defend Civil Suit No. 0224 of 2024.

- The Applicant shall file his written statement of defence and his iii. counterclaim in Civil Suit No. 0224 of 2024 within 14 (fourteen) days from the date of this order. - Costs of this application shall abide by the outcome of Civil Suit No. iv. 0224 of 2024.

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**Patricia Mutesi**

**JUDGE**

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