[2024] UGCommC 209

## THE REPUBLIC OF UGANDA

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

# **MISCELLANEOUS APPLICATION NO. 2860 OF 2023** (ARISING FROM CIVIL SUIT NO. 1341 OF 2023)

DR. FRANCIS NELSON OWORI :::::::::::::::::::::::::::::::::::: **VERSUS**

## **UMA SAVINGS AND CREDIT** <table> COOPERATIVE SOCIETY LTD :::::::::::::::::::::::::::::::::::

# (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 Rule 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. 1341 of 2023. - 2. Costs of this application be provided for.

Briefly, the grounds of this application are that:

- 1. The Applicant has a good defence against the Respondent's claim in Civil Suit No. 1341 of 2023 (hereinafter "the main suit"). - 2. There are triable issues of law and fact in the main suit including the true quantum of the outstanding loan balance, the legality of the penalties imposed on the Applicant, the disregard of substantial payments made by the Applicant, among others. - 3. It is just, fair and reasonable that this application is allowed.

The application is supported by an affidavit sworn by the Applicant. He stated that he is a member of the Respondent and that on 20^th February 2018, he applied to the Respondent for a loan of UGX 520,000,000. His loan application was approved and, on 6^th March 2018, the parties executed a loan agreement. The loan was to be repaid with interest at the rate of 16% per annum within 36 months. Repayment was secured by a residential house in Kyanja on the land comprised in Kyadondo Block 195 Plots 1121 and 1122 and by 5 other plots of land comprised in Kyadondo Block 195 Plots 663, 664, 6665, 6666 and 6671 all situate at Namugongo.

The Applicant stated that he started making payments towards the loan in 2018 and that there is a serious dispute as to the sum due since the loan statement, which is the basis of the main suit, does not include prior payments he made before 2021. Additionally, he asserted that the sum claimed contains penalty interest which was never contracted in the loan agreement but instead arose from a unilateral variation of the loan agreement by the Respondent.

Finally, the Applicant stated that on 8^th September 2023, he received a notice of termination of his membership from the Respondent but the Respondent did not follow through with the intended termination. After its Annual General Meeting ("AGM"), the Respondent informed him that he should make good his loan obligations before the next AGM which is slated for September 2024. This gave him an extra 12 months to clear the loan and it is, therefore, premature, for the Respondent to bring the main suit at this stage to recover the loan. Further still, the Respondent refused to pay his dividends for 2022 - 2023 and this is irregular.

The Respondent opposed the application through an affidavit in reply sworn by its Manager, Mr. Aonu Nobert Okiror. He firstly, contended that this application was filed out of time as the Respondent was served with process in the main suit through his lawyers who duly acknowledged receipt thereof on 14^th November 2023, yet they filed this application on 27^th November 2023. On the merits of the application, Mr. Okiror stated that the Applicant has always frustrated the recovery process on the said securities by lodging caveats on the title deeds.

Mr. Okiror pointed out that on 14^th July 2023, the Applicant's former lawyers acknowledged the outstanding loan amount of UGX 177,631,877 which is the same sum indicated on the loan statement. He explained that the extract of the loan statement adduced in Court starts from 2021 because there are no issues with any of the prior payments made by the Applicant and the same were duly considered in arriving at the claimed sum. He also clarified that there was no penalty interest applied to the loan arrears and that, instead, the Respondent's

members duly elected at the 2020 AGM to reduce the interest rate for the loan to 15% to enable the Applicant repay the loan more conveniently.

Finally, Mr. Okiror clarified that it is not true that the Respondent gave the Applicant an extra 12 months until September 2024, but rather, the true position was that his failure to fully repay the loan by that date will lead to termination of his membership. He also stated that following the Applicant's failure to comply with the loan obligations, the Respondent was left with no option but to start deducting the monthly amount payable in instalments from the Applicant's savings with the Respondent SACCO until the end of May 2021 when the last amount was withdrawn from the Applicant's savings account.

The Applicant filed an affidavit in rejoinder wherein he stated that the Respondent's reply shows that, indeed there are triable issues for this court to determine in the main suit. He denied being served with the summons in the main suit through his email. He denied giving instructions to his former lawyers, Nyombi & Co. Advocates, to receive the summons as they did, but he acknowledged that, on account of his previous instructions to them, they informed him that they had been served with the summons on 15^th November 2024 and he duly instructed his current advocates, Okalang Law Chambers, to respond as they did. He contended that service of summons ought to be personal which the Respondent failed to do in this case and that the mistake of his former advocates ought not to be visited on him.

#### **Issues arising**

- 1. Whether this application is competent. - 2. Whether the Applicant has a bonafide defence which raises a triable issue in the Civil Suit No. 1341 of 2023.

#### **Representation and hearing**

At the hearing, Mr. Phillip Kasimbi of Okalang Law Chambers appeared for the Applicant while Mr. Turyamuhebwa Francis of Solace Advocates appeared for the Respondent. Both counsel argued the application orally. I have considered their submissions, the laws and authorities they cited and all other materials on record in deciding this application.

#### Determination of the issues

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### Issue 1: Whether this application is competent.

In a summary suit, a defendant does not have an automatic right to appear and defend himself or herself. Once he or she is served with the summons and the plaint in the summary suit, he or she can only appear and defend himself or herself after obtaining leave to do so from the court in which the suit was filed. (See Order 36 rules 3 and 4 of the Civil Procedure Rules).

To obtain such leave of court, that defendant must file a formal application to the court within the prescribed time. That application must be filed within 10 (ten) days from the date on which the defendant is served with the summons and the plaint in the summary suit. (See Order 36 Rules 3(1) and 4 and Form 4 Appendix A of the Civil Procedure Rules).

In the instant case, the record in the main suit contains an affidavit of service of summons that was sworn by Ms. Kamaliza Immaculate, an Advocate of the High Court working with Solace Advocates who represent the Respondent in this matter. Therein, she swore that she received a copy of the summons in the main suit on 13^th November 2023 and forwarded the same, along with the plaint, to the Applicant through his email address, fnowori@yahoo.com. According to the subsequent email correspondence attached to the said affidavit of service as Annexure A, the Applicant is shown to have replied and directed Ms. Kamaliza to deal with his legal representatives at the time, Nyombi & Co. Advocates, who he duly copied into his reply.

Ms. Kamaliza also swore that, on 14^th November 2023, she went to the chambers of Nyombi & Co. Advocates and introduced herself and her purpose there to the receptionist. The latter contacted counsel in personal conduct who authorised her to receive the summons and the plaint. She then acknowledged receipt by signing on the summons and on the plaint. Duly received copies of the summons and the plaint are annexed to the affidavit of service as Annexure B.

It is not in dispute that the Applicant filed this application on 27^th November 2023 which was 13 days after being served with the summons and the plaint in the main suit. This was clearly outside the prescribed 10-day period.

The Applicant has not given the court any explanation or justification for his late filing of this application. Instead, the Applicant appears to have simply denied the late filing altogether. In his affidavit in rejoinder, the Applicant denied the email correspondence attributed to him in the affidavit of service. However, he acknowledged that Nyombi & Co. Advocates were his counsel at the time and that they duly received the court process on his behalf.

I note that the Applicant is guilty of telling the Court an obvious falsehood when he claimed, at para. 5 of the affidavit in rejoinder, that his said former counsel received the summons and the plaint in the main suit on 15^th November 2024, a date which still lies in the future. My impressions, from this obvious lie, are that the Applicant realised, from the affidavit in reply, that he had actually filed this application after the lapse of the prescribed time and that he filed the affidavit in rejoinder in a mere desperate attempt to confuse the facts so that it appears to the Court that he had filed the application in time.

It is trite law that an obvious falsehood told under oath in an affidavit renders the entire affidavit suspect and makes it more likely than not that the deponent of the affidavit has not been entirely honest in other parts of that affidavit. (See Sirasi Bitaitana v Emmanuel Kananura (1977) HCB 34). In the instant facts, it is evident that the Applicant's former lawyers cannot have been served with the summons and the plaint on 15^th November 2024 because that date has not yet come to pass. This obviously false claim makes me less inclined to accept as true any of the other parts of the affidavit in rejoinder.

It is not disputed that Nyombi & Co. Advocates were the Applicant's counsel at the time when they were served with the summons on his behalf. They had even corresponded with the Respondent on his behalf before that on 3^rd April 2023 and on 14^th July 2023. That earlier correspondence corroborates Annexure A to the affidavit of service (the email correspondence) and makes it more probable than not that it is the Applicant who actually sent an email to the Respondent's representative directing her to serve the summons on Nyombi & Co. Advocates.

Furthermore, contrary to the Applicant's assertion in paragraph 6 of the affidavit in rejoinder that service should only be made on a defendant personally, Order 5 rule 10 of the Civil Procedure Rules provides that, if the defendant has an agent who is empowered to accept service on his or her behalf, service of summons on that agent shall be sufficient. In this case, in Annexure A to the affidavit of service, the Applicant confirmed that Nyombi & Co. Advocates were his legal representatives and directed the Respondent's representative to deal with them as far as service of the summons was concerned.

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It is, therefore, my considered finding that the Applicant was duly served with the summons and the plaint on 14^th November 2023 and that the Applicant filed this application on 27^th November 2023 after the lapse of the prescribed time. Since the Applicant has not made out any sufficient cause or reason that justifies the delayed filing of this application, this application is clearly incompetent and any consideration of its merits would be moot and inconsequential.

Consequently, I make the following orders:

- $i.$ This application is struck off the Court record. - A summary judgment is entered in Civil Suit No. 1341 of 2023 in favour ii. of the Respondent/Plaintiff against the Applicant/Defendant under Order 36 Rule 5 of the Civil Procedure Rules S. I. 71-1. - The Applicants/Defendants shall pay the sum of **UGX 189,068,114/=** iii. being the outstanding loan arrears to the Respondent/Plaintiff. - iv. The Applicants/Defendants shall pay interest to the Respondent on the sum in (iii) above at the rate of 15% per annum from 1^st October 2023 until payment in full. - Costs of this application and those of Civil Suit No. 1341 of 2023 are $V.$ awarded to the Respondent/Plaintiff.

o a tenler

Patricia Mutesi JUDGE $(30/07/2024)$