[2025] UGCommC 193

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISC. APPLICATION NO. 613 OF 2025 (ARISING FROM CIVIL SUIT NO. 237 OF 2025)**

10 **NDUHO MUGYENYI ::::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT**

## **VERSUS**

# **MOSES MATSIKO ::::::::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT**

### **BEFORE: HON. LADY JUSTICE PATIENCE T. E. RUBAGUMYA**

# 15 **RULING**

## Introduction

This application was brought by way of Notice of Motion under **Section 98 of the Civil Procedure Act, Cap. 282**, **Order 36 rules 3 and 4** and **Order 52 rules 1 and 3 of the Civil Procedure Rules SI 71-1**, seeking orders

20 that:

- 1. The Applicant be granted unconditional leave to appear and defend *Civil Suit No. 237 of 2025*. - 2. Costs of this application be provided for.

# Background

- 25 The background of this application is contained in the affidavit in support deponed by **Mr**. **Nduho Mugyenyi** the Applicant herein, and is summarised below: - 1. That he is a businessman and an entrepreneur dealing in bidding and securing construction and civil works tenders from Government 30 Agencies, private individuals, organisations and companies.

- 5 2. That during the entire period of doing the said business, he has been working with the Respondent, as a partner. That the Respondent would always contribute towards the process of securing tenders on the understanding that he would get a commission upon the Applicant securing the tenders and if the tender is not secured, it 10 would not be possible to get back the money. - 3. That sometime in June, 2023, he was anticipating a construction tender from the Local Government and as a result, the Respondent gave him UGX 50,000,000/= to enable him secure the tender, as his partner. On various subsequent occasions, the Respondent also gave 15 him UGX 30,000,000/= and UGX 20,000,000/=. - 4. That according to their understanding, if the tender was secured, the Respondent would be entitled to a commission of UGX 300,000,000/=, which would be secured by issuing a cheque. - 5. That on that basis, he gave the Respondent an open and undated 20 Equity Bank Cheque No. 000040 on an understanding that the Respondent would only deposit it on confirmation that money had been paid into his account. - 6. That unfortunately, he failed to secure the tender and lost all the money they had put in anticipation of the market tender, including 25 the money from the Respondent. - 7. That the money claimed by the Respondent was not lent to him to be paid back from his business or sources but was given to facilitate and secure the anticipated tender in anticipation of a commission. - 8. That sometime in December, 2023, he learnt that the Respondent 30 had filled the cheque and deposited it, yet he was aware that they had failed to secure the tender.

- 5 9. That on 13th November, 2024, for purposes of securing his freedom since he had been curtailed due to the criminal charge preferred against him for issuing a false cheque to the Respondent vide CRB 1157 of 2023, he entered into a Memorandum of Understanding with the Respondent. - 10 10. That therefore, the Applicant has raised triable issues and a bonafide defence.

In reply, the Respondent **Mr. Moses Matsiko**, opposed the application, contending that:

- 1. At no time did he enter into any partnership agreement, formal or 15 informal with the Applicant. That their relationship was strictly that of a lender and borrower and the mischaracterization of the loan agreement as a partnership is misleading. - 2. Sometime in 2023, he extended a personal loan of UGX 300,000,000/= which was to be repaid under mutually agreed terms. - 20 That there were no shared profits, joint investments, business dealings between them or commission as the Applicant alleges. - 3. He filed a criminal case against the Applicant for issuing a false cheque at Jinja Road Police Station vide CRB 1157 of 2023. - 4. A reconciliation meeting was held on 5th November, 2024 at KNT 25 Advocates' premises, where it was agreed that the Applicant pays UGX 250,000,000/= to the Respondent in full and final settlement of the case. - 5. On 13th November, 2024, both parties signed a Memorandum of Understanding wherein the Applicant acknowledged being indebted 30 to the Respondent to a tune of UGX 250,000,000/=.

- 5 6. The Applicant signed the acknowledgement of indebtedness voluntarily, knowingly and in the presence of his own lawyer, Mr. Innocent Ddamulira of M/s DIT Advocates, a clear indication that the execution of the said document was done freely and with full understanding of its legal implications. - 10 7. The Applicant's attempt to disown or minimise the significance of the acknowledgement is an afterthought, intended to avoid liability for a debt he lawfully and voluntarily acknowledged.

In rejoinder, the Applicant reiterated his previous averments and added that:

- 15 1. He has never executed a loan agreement with the Respondent and nor was their relationship one of a lender and borrower. - 2. The Respondent has never extended a loan of UGX 300,000,000/= to him. - 3. He never signed the Memorandum of Understanding with an - 20 intention of it turning a partnership arrangement into a loan arrangement. - 4. In their partnership arrangement, the cheques were used to confirm the Respondent's investment and profit anticipated.

# Representation

25 The Applicant was represented by Learned Counsel Innocent Ddamulira of **M/s DIT Advocates** and the Respondent was represented by Learned Counsel Oliver Namawejje of **M/s KNT Advocates, Attorneys & Legal Consultants**.

Both parties filed their written submissions and the same have been 30 considered by Court.

## 5 Issues for Determination

- 1. Whether the Applicant has raised sufficient grounds to warrant the grant of unconditional leave to appear and defend *Civil Suit No. 237 of 2025*? - 2. What remedies are available to the parties? - 10 Issue No. 1: Whether the Applicant has raised sufficient grounds to warrant the grant of unconditional leave to appear and defend *Civil Suit No. 237 of 2025*?

## Applicant's submissions

Learned Counsel for the Applicant first relied on the law and principles 15 that govern such applications as well as the authorities of *Maluku Interglobal Trade Agency Ltd Vs Bank of Uganda [1985] HCB 65, Children of Africa Vs Sarick Construction Ltd HCMA No.134 of 2016, Jamil Ssenyonjo Vs Jonathan Bunjo Civil Suit No. 180 of 2012* and *M. M. K Engineering Ltd Vs Mantrust Uganda Ltd HCMA No.128 of* 20 *2012*.

Learned Counsel then submitted that the Applicant's averments in the affidavit in support emphasize that the Memorandum of Understanding dated 13th November, 2024, resulted from a criminal charge which arose from a cheque which the Applicant only signed and asked the Respondent

25 to keep until their tender materialises but the Respondent acted to the contrary. That the Applicant was never given UGX 300,000,000/= but UGX 50,000,000/=, then UGX 30,000,000/= and UGX 20,000,000/= subsequently.

That the said money was advanced under a partnership relationship and 30 not a lender-borrower arrangement hence the lack of loan documentation

5 since that has been their working relationship. That the Respondent is using Court to avoid a loss that they jointly suffered and that therefore, the Applicant has a plausible defence to the suit.

#### Respondent's submissions

In reply, Learned Counsel for the Respondent also first relied on the law 10 and principles that govern such applications.

Learned Counsel then contended that the Applicant acquired a loan of UGX 300,000,000/= from the Respondent. That it was the Applicant who proposed a settlement wherein he would pay the Respondent UGX 250,000,000/= and to that a Memorandum of Understanding was 15 executed. That the language used in the Memorandum of Understanding is that of a loan agreement and not a partnership, profit sharing or commission.

Further, that the Applicant's argument that he signed the Memorandum of Understanding to secure his freedom from the criminal charge against 20 him vide CRB 1157 of 2023, is a sham and that the Applicant is basically approbating and reprobating. That the Applicant has also not produced any evidence to support his allegations that the Respondent was a business partner.

#### Analysis and Determination

25 I have taken into consideration the affidavits in support, reply and rejoinder and the written submissions and authorities thereto.

**Order 36 rule 3(1) of the Civil Procedure Rules**, stipulates that a Defendant served with summons, issued upon the filing of an endorsed plaint and affidavit under rule 2 of this Order endorsed, "Summary 5 procedure", shall not appear and defend the suit except upon applying for, and obtaining leave from Court.

It is now trite that for leave to appear and defend a summary suit to be granted, an Applicant/Defendant must show by affidavit or otherwise that there is a bona fide triable issue of fact or law.

10 A triable issue is one capable of being resolved through a legal trial, that is, a matter that is subject to or liable to judicial examination in Court. It has also been defined as an issue that only arises when a material proposition of law or fact is affirmed by one party and denied by the other. (See: *Jamil Ssenyonjo Vs Jonathan Bunjo (supra)*. It is also trite that a 15 defence raised by the Applicant should not be averred in a manner that appears to be needlessly bald, vague or sketchy. If the defence is based upon facts, in the sense that material facts alleged by the Plaintiff in the plaint are disputed or new facts are alleged constituting a defence, the Court does not attempt to decide these issues or to determine whether or 20 not there is a balance of probabilities in favour of the one party or the

other.

In essence, where the Applicant raises a good defence, the Plaintiff is barred from obtaining summary judgment. In the case of *Bhaker Kotecha Vs Mohammed [2002] 1 EA 112* it was held that where a suit is brought 25 under summary procedure on a specially endorsed plaint, the Defendant is granted leave to appear and defend if he/she can show that he/she has a good defence on merit, or that a difficult point of law is involved or a dispute as to the facts which ought to be tried or a real dispute as to the amount claimed which requires taking an account to determine or any 30 other circumstances showing reasonable grounds of a bona fide defence.

5 Furthermore, in the case of *Maluku Interglobal Trade Agency Ltd Vs Bank of Uganda (supra)*, Court noted that:

"*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* 10 *the issues disclosed at this stage.*"

In the instant case, according to the pleadings, the Respondent vide a summary plaint, instituted *Civil Suit No. 237 of 2025* against the Applicant for recovery of UGX 250,000,000/= being the total amount of money in default of a loan repayment, interest and costs of the suit.

15 The suit is premised on the background that; sometime in 2023, the Applicant borrowed UGX 300,000,000/= from the Respondent. That the Respondent filed a criminal case against the Applicant for issuing a false cheque at Jinja Road Police Station vide CRB 1157 of 2023. That a reconciliation meeting was held on 5th November, 2024, at KNT Advocates' 20 premises, where it was agreed that the Applicant pays UGX 250,000,000/=

in full and final settlement of the case.

Further, that on 13th November, 2024, both parties signed a Memorandum of Understanding to that effect and the Applicant agreed to pay the money in issue in instalments and the 1st instalment was to be paid on 15th

25 December, 2024. That the Applicant has since refused to pay, hence the suit. In evidence, the Respondent attached a copy of the cheque, as annexure "**A**" and a copy of the Memorandum of Understanding as annexure '**B**", to the plaint and affidavit in reply, respectively.

I have perused annexure **"B"** attached to the affidavit in reply, an 30 Indebtedness and Settlement Agreement dated 13th November, 2024

- 5 between the parties. Therein the Applicant acknowledged being indebted to the Respondent to a sum of UGX 250,000,000/= and agreed to repay the same in instalments. The same was duly signed by both parties in the presence of their Advocates, a fact that is not disputed by the Applicant. I have also observed that the parties therein refer to themselves as debtor - 10 and creditor and the Agreement does not disclose whether the debt being acknowledged arose out of a loan or a partnership arrangement.

On the other hand, the Applicant does not dispute having executed the Indebtedness and Settlement Agreement, annexure **"B"** attached to the affidavit in reply, however he contends that he only signed the same to 15 secure his freedom since he had been curtailed due to the criminal charge preferred against him by the Respondent. However, it is now trite that

threat of the process of Court does not amount to coercion or duress. (See:

## *Nakalima Vs Ann Nandawula Kabali HCMA No. 235 of 2013*).

The Applicant also disputes having been advanced a loan of UGX 20 300,000,000/=. He avers that he received a total sum of UGX 100,000,000/= from the Respondent. That the sum advanced was a partnership investment and if he secured the tender, the Respondent would be entitled to a commission of UGX 300,000,000/= but if he was not successful, the Respondent would not be entitled to anything. This fact 25 is disputed by the Respondent who contends that he has never had a partnership relationship with the Applicant and that the money advanced was a loan as intimated in the Agreement. As earlier noted, the Memorandum of Understanding does not disclose anything related to a loan arrangement between the parties and therefore, this raises triable 30 issues of law and fact.

5 I have also noted that both parties did not adduce evidence to prove the existence of either a loan or partnership arrangement between them, as alleged.

As was held in the case of *Bhaker Kotecha Vs Mohammed (supra)* a Defendant will be granted leave to appear and defend if he shows that 10 there is a dispute as to the facts which ought to be tried.

As espoused in the authorities discussed above and as laid out in the case of *Twentsche Overseas Trading Co. Ltd Vs Bombay Garage [1958] EA 741*, summary procedure is resorted to in clear and straightforward cases where the demand is liquidated and there are no issues for determination

15 by the Court except for the grant of the claim.

In the instant case, the Applicant disputes the claim against him and he further raises issues about the circumstances that led to the signing of the Memorandum of Understanding, which need further investigation in a trial to ascertain the basis of the claim against the Applicant in the main suit.

20 In addition, the nature of the business relationship and the terms of engagement between the parties that led to issuance of the cheque are not clear and yet they have a bearing on the claim by the Respondent. Further, the issue of whether the Applicant is indebted to the Respondent and if so, the amount due is a triable issue of fact. In my view, the facts presented 25 by both parties raise triable issues of law and fact that ought to be investigated by Court in a trial thus placing the plaint outside the ambit of **Order 36 of the Civil Procedure Rules**.

Therefore, Issue No. 1 is answered in the affirmative.

5 Issue No.2: What remedies are available to the parties?

The East African Court of Appeal in the case of *Churanjila & Co. Vs A. H Adam (1) [1950] 17 EACA 92*, held that a Defendant who has a stateable and arguable defence must be allowed to state it and argue it before the Court.

10 In the premises, I find that the Applicant has raised triable issues of law and fact that merit the grant of this application. The Applicant is therefore, entitled to unconditional leave to appear and defend the main suit.

Accordingly, this application is granted with the following orders:

- 1. The Applicant is hereby granted unconditional leave to appear and - 15 defend *Civil Suit No. 237 of 2025.* - 2. The Applicant is ordered to file his Written Statement of Defence within fifteen (15) days from the date of this Ruling. - 3. Costs of this application shall be in the cause.

I so order.

20 Dated, signed and delivered electronically via ECCMIS this **27th** day of **June**, **2025.**

Patience T. E. Rubagumya **JUDGE** 27/06/2025 25 6:40am