[2025] UGCommC 39

## THE REPUBLIC OF UGANDA

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

# **MISCELLANEOUS APPLICATION NO. 3045 OF 2023** ARISING FROM CIVIL SUIT NO. 1536 OF 2023

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ESTHER NALWOGA :::::::::::::::::::::::::::::::::::: **VERSUS**

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ANDREW KYEYUNE ::::::::::::::::::::::::::::::::::::

(Before: Hon. Justice Patricia Mutesi)

#### **RULING**

#### **Background**

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

- 1. The Applicant be granted unconditional leave to appear and defend Civil Suit No. 1536 of 2023. - 2. Costs be provided for.

Briefly, the grounds of this application are that:

- 1. The Applicant has plausible grounds of defence with justifiable merits to Civil Suit No. 1536 of 2023 ("the main suit"). - 2. There are bonafide triable issues of law and fact in the main suit. - 3. It is just, fair and equitable that this application is allowed.

The application is supported by the affidavit of the Applicant. She told the Court that the main suit does not disclose a cause of action against her, that she is not indebted to the Respondent to the tune stated and that the main suit was filed prematurely. The Applicant stated that the parties' 13^th January 2021 Addendum to the Memorandum of Understanding provided that the Respondent would be paid upon the sale of the land comprised in Kibuga Block 36 Plot 641 situate at Kitebi ("the suit land"). She revealed that the suit land is yet to be sold since a caveat was lodged halting the processing of its certificate of title.

The Applicant further told Court that the suit land is owned by five members of her family, that is, Kissuko Wilson, Kiwanuka Godfrey, Mukasa Herbert, Nalwoga Esther and Birabwa Milly Namubiru. Conflict arose in the family as some of the members were selling the family's land illegally and title processing was halted by the office of the RCC – Rubaga Division. She contested the genuineness of the transaction documents relied on by the Respondent claiming that her lawyers neither drew nor witnessed the same and that the she has never agreed to the contents therein. Finally, she stated that the Respondent has imposed a 100% surcharge on the loan and that the suit land is matrimonial property as it is the home of the widow, Kisukko Eliyasafu, who did not consent to the transaction.

The Respondent swore and filed an affidavit opposing the application. He told the Court that there are glaring admissions by the Applicant in her affidavit in support of the application and that the same were also made in the Request for Extension of the Agreement dated 31^st July 2023 by Major Kiberu Eria Kissuko, the 1^st Defendant in the main suit. He said that the Applicant had been evasive and untruthful in her denial of the claim in the main suit.

The Respondent further stated that the Addendum executed and forming part of the Memorandum of Understanding purportedly signed on 13^th January 2021, the same day the Memorandum of Understanding was signed, is a document merely generated by the Applicant and the other Defendants in the main suit to frustrate his claim as he never consented to, had knowledge of or signed it. He also said that the alleged fraud in his documents has not been particularised by way of counterclaim and that, while the Applicant is purporting to dispute her lawyer's role in the execution of the Addendum dated 11^th January 2022, the said lawyer has not sworn an affidavit to that effect yet the Applicant does not deny signing that Addendum.

The Applicant swore an affidavit in rejoinder to the affidavit in reply. She stated that the request for extension of the Agreement dated 11th January 2022 and the letter by Major Kiberu Eria Kissuko do not imply an admission of failure to pay the loan. She reiterated that the Addendum dated 13^th January 2021 clearly states that the loan would be repaid upon the sale of the suit land and that the suit land is yet to be sold. She also reiterated her claim that the Respondent has applied an illegal surcharge of 100% on the loan. Finally, she claimed that the Respondent required the beneficiaries of the suit land to execute a document

$\overline{2}$

consenting to the loan before finalising the Memorandum of Understanding which implies that he was aware of everything that was going on at the time.

### **Issues arising**

Whether this application discloses grounds that warrant grant of unconditional leave to appear and defend Civil Suit No. 1536 of 2023.

## **Representation and hearing**

At the hearing, the Applicant was represented by M/S Generis Advocates while the Respondent was represented by M/S A. Mwebesa & Co. Advocates. I have carefully considered the submissions of counsel, the laws and authorities they cited and all the other materials on the record while deciding this application.

## Determination of the issue

Summary procedure should be resorted to in clear and straightforward cases where the demand is liquidated and where there are no points for court to try. (See Negalambire Faruku & 2 Ors v Woira Brian, HCMA No. 1145 of 2020). For that reason, according to Order 36 Rules 3(1) and 4 of the Civil Procedure Rules, a defendant in a summary suit does not have an automatic right to present his or her defence. He or she can only file a defence and appear at the hearing to prove the same if he or she has been granted leave to do so by Court. 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.

It also goes without saying that leave to appear and defend a summary suit will be granted to a defendant if it is discovered that the suit seeks both a liquidated and an unliquidated demand or that the suit involves some points for the Court to try.

I have examined the specially endorsed plaint in the main suit. Prayer (d) at page 3 of that specially endorsed plaint is a request for an award of general damages. General damages are the losses that flow naturally from the defendant's breach. They are what the law presumes to be the direct, natural or probable result of the defendant's breach of contract. Such damages are awarded at the discretion of the Court. (See Hadley v Baxendale (1894) 9 Exc. 341). In assessing them, Court is always guided by the evidence adduced at the trial.

This would ordinarily justify the grant of leave to appear and defend. However, when this application was called on for hearing, counsel for the Respondent told the Court that the Respondent had elected to abandon his prayer in the plaint for general damages and to submit only the remainder of the reliefs sought in the plaint for consideration.

The Applicant did not adduce any evidence proving that she repaid the loan sum extended to her and her co-Defendants in the main suit by the Respondent. This confirms that the loan principal remains outstanding. However, I agree with the Applicant that the surcharge on the loan presents a significant complication as it allows the Respondent to recover a surcharge equal to 100% of the principal immediately upon the breach of the loan repayment timeline.

While the loan principal may be recovered at this stage, the Court ought to hear the parties on the propriety of the surcharge before allowing its recovery. This is because the surcharge appears to be excessive, punitive and unconscionable. A surcharge, in the context of this case, ought to have been a fair and genuine pre-estimate of the loss that would have been occasioned on breach of the loan agreement. On its face, a 100% surcharge on the loan principal may not be a fair and genuine pre-estimate of the damage suffered by the Respondent following the breach in the present facts, especially since it was unconditional and could be recovered immediately following the breach without the need of proof of any actual damage or injury on the part of the Respondent.

I am in agreement with the Applicant that the propriety of the surcharge or any other relief due to the Respondent for the breach of the loan agreement is an issue which ought to be thoroughly interrogated at a trial of before the Court can take leave of the main suit. I have not found any merit in any of the other grounds raised in this Application. As already noted, while receipt of the loan principal is not in dispute, there is no evidence proving that this principal, or any part thereof, was ever repaid.

Accordingly, this application shall succeed in part. A summary judgment shall be entered for the Respondent pursuant to Order 36 Rule 6 of the Civil Procedure **Rules** for the recovery of the loan principal of UGX 50,000,000. The suit will then proceed to trial only on the issues of the propriety of the impugned surcharge and whether there are any other reliefs available to the parties.

Consequently, I make the following orders:

- The Defendants in Civil Suit No. 1536 of 2023 shall jointly and severally i. pay the sum of UGX 50,000,000 to the Respondent/Plaintiff therein. - ii. The Applicant is granted conditional leave to appear and defend Civil Suit No. 1536 of 2023 on the issues of the propriety of the surcharge and whether there are any other reliefs available to the parties. - iii. The Applicant shall file her written statement of defence to Civil Suit No. 1536 of 2023 within 15 (fifteen) days from the date hereof. - iv. Costs of this application shall abide by the outcome of Civil Suit No. 1536 of 2023.

rea bente

**Patricia Mutesi JUDGE** $(31/03/2025)$