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THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF
UGANDA AT KAMPALA
(COMMERCIAL COURT
DIVISION)
HCT-00-CC-MA-0702 OF 2005
(Arising from
HCT-00-CC-MA-0105-2004 and HCT-00-CC-CS-0079-2004)
MUKABURURA FOUNDATION
INVESTMENTS LTD
::::::::::::::::::::::::::::::: APPLICANT
VERSUS
SOUTHERN INVESTMENTS LIMITED :::::::::::::
RESPONDENT
BEFORE: THE HONOURABLE MR. JUSTICE YOROKAMU
BAMWINE
R U L I N G:
This is an application
under 0.40 r 2, 0.48 rr. 1 and 3 of the Civil Procedure Rules and S. 98 of the
Civil Procedure Act. It is
for the orders that the Applicant be granted leave
to appeal against the order of this Court (per M.S. Arach – Amoko, J)
dated
9/11/2004 and that costs of the application be provided for.
From
the evidence, the Applicant had undisclosed business dealings with the
Respondent. In a letter dated 7/3/2001 addressed to Standard
Chartered Bank,
Kampala, the Applicant authorized the said bank to “irrevocably and
unconditionally debit our Account NR 32–9-04-33229-00-1
held with your
bank by US $118,800 (one hundred eighteen thousand and eight hundred US Dollars)
only, and transfer the said amount
to the following account without any further
notice:
Bank: Tropical Africa Bank Ltd Kampala –
Uganda.
Beneficiary: Mukaburura Foundation Investments Ltd.
Account NR:
2122999847
Best regards,
Habib Kagimu MUYANJA
MBABALI
CHAIRMAN EXECUTIVE DIRECTOR”
It is claimed by the
Applicant that upon presentation of the same to the bank, it was dishonoured.
The Applicant sued the Respondent
under 0.33 of the Civil Procedure Rules to
recover the amount stated in the above instructions. The Respondent applied for
leave
to appear and defend wherein it sought to adduce evidence to prove that
the transfer of funds was conditional. The learned Trial
Judge, inter alia,
considered the affidavit evidence and proceeded to grant leave to appear and
defend. The Applicant wants to appeal
against that order.
From the
records also, following the grant of the said leave to the Respondent, the
Applicant felt aggrieved by the decision of the
Court and appealed to the Court
of Appeal. In the Court of Appeal, counsel for the Respondent successfully
challenged the competence
of the Appeal which had been filed without leave being
sought and/or granted. The Appeal was dismissed on account of that. Applicant
now seeks to start the process all over again. Hence this application. The
Respondent has raised two major grounds in opposition
of this
application:
1. That there are no grounds meriting serious consideration by
the Court of Appeal.
2. That the Appeal was dismissed and not struck out.
Therefore, no Appeal can
again lie to that Court on the same facts and
circumstances.
I will start with the second ground. Under Rule 93 (4) of
the Court of Appeal Rules, 1996, if all the parties to the Appeal do not
consent
to the withdrawal of the Appeal, the Appeal shall stand dismissed with costs.
It does not state the effect of such a dismissal.
Be that as it may, under Rule
81 thereof, a person on whom a notice of Appeal has been served may at any time,
either before or
after the institution of the Appeal, apply to the Court to
strike out the notice or the Appeal as the case may be, on the ground
that no
Appeal lies or that some essential step in the proceedings has not been taken or
has not been taken within the prescribed
time. The Rule does not state that
such challenge can also be made in the lower Court, this Court. I would leave
it to the Appellate
Court itself to determine the competence of the Appeal
before it. This ground in my view lacks merit. I would disallow it and I
do
so.
As regards the second ground, Mr. Karugire’s argument is this:
that the Applicant filed a suit to enforce the said payment instructions;
and
that the Respondent applied for leave to appear and defend. The application was
based on two major grounds:
1. That it did not receive any consideration for
issuance of the payment instructions.
2. There was no evidence that the
instructions had actually been presented and dishonoured.
Mr.
Karugire’s point is that the trial Judge accepted the 2 grounds and
granted leave to the Respondent to defend the suit.
That her decision will not
cause any prejudice to the Applicant.
Mr. Babigumira does not agree. His
argument is that by allowing the Respondent to advance its reasons for seeking
leave to appear
and defend, the Judge admitted evidence to prove lack of
consideration and non-presentation of the instructions to the Bank, which
evidence she should not have considered at all. Hence his conviction that the
Applicant has grounds of Appeal which merit serious
consideration by the Court
of Appeal.
I have addressed my mind to the able arguments of both
counsel. The law as understood by this Court is that before leave to appear
and
defend is granted, the Defendant/Applicant 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 Respondent/Plaintiff is not
entitled to summary Judgment.
That much was stated by the learned Trial
Judge in her Ruling. The Defendant is not expected 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 should not enter
upon the trial of
the issues disclosed at this stage. As to whether such decision, once made by
Court, to grant leave is appealable
or not, the law was well stated in Sango
Bay Estates Ltd & Others –Vs- Dresdner Bank [1971] EA 17. Simply
put, leave to appeal from an order in civil proceedings will normally be granted
where prima facie it appears that there
are grounds of appeal which merit
serious judicial consideration. However, where the order from which it is
sought to appeal was
made in the exercise of a judicial discretion, a rather
stronger case will have to be made out.
There is no doubt in my mind that
the order which the Applicant seeks to challenge on appeal was made in exercise
of a judicial discretion.
The Applicant filed a suit under summary procedure.
He wants to enforce payment instructions issued by the Respondent. The
Respondent
does not deny issuance thereof. Its case is that both parties knew
at the time of its execution that the instruction was subject
to occurrence of
some future event; that there was no consideration for the instructions and that
in any case there is no evidence
that the instructions were presented to the
bank and dishonoured. From the records, the Applicant was deemed a holder for
value
from the moment the instructions were issued. Every person whose
signature appears on it is prima facie deemed to have become a
party thereto for
value. However, this is a rebuttable presumption. It can be rebutted by
adducing evidence to show that the document
was affected by fraud, duress or
force and fear or even illegality. There is no way the Respondent can be heard
on the matter if
it is not allowed to file a defence. To hold that the
Respondent must pay without question when it has raised issues relating
to the
enforceability of the instructions would be to condemn it unheard. It would be
in contravention of the principles of natural
justice that no man can be
condemned unheard. It is noteworthy that the Applicant is, up to this point in
time, reluctant to disclose
what business deal it was. At its face value, the
claim could as well be ex turpi causa; an illegal claim which this Court cannot
lend a hand in its enforcement. Therefore, whether or not the instructions were
supported by any consideration is a triable issue
which ought to be investigated
and remedied. The Court with competence to do so is this one. If the Court
gets it wrong, the Court
of Appeal will be there to do the
needful.
Besides, this Court has before it the said transfer instructions
dated 7th March 2001. The copy which the Applicant itself relies on
shows no evidence of presentment to the bank or dishonour thereof. In
a case of
this nature, the cause of action arises when the bill of exchange is
dishonoured. In the absence of any such evidence
of dishonour, the Defendant
would be entitled to raise the issue of the plaint disclosing no cause of
action. Again, the Court with
competence to determine that is this one. The
Respondent would have no way of challenging such a bill of exchange if it is not
allowed
to file a defence and defend itself against the suit.
In my view,
no amount of argument would lead any Court to circumvent these two grounds on
appeal. Accordingly, the exception stated
in Spry, V.P’s observation in
the Sango Bay case, supra, clearly supports the Respondent’s argument that
it ought to
be heard in its defence of the suit. Whether the defence would
succeed or not would be for another day. The Court exercised a judicial
discretion in granting leave to the Respondent to appear and defend. The
intended appeal therefore lacks any ground that would merit
serious judicial
consideration. The Applicant stands to lose nothing since any decision of this
Court would be open to challenge
on appeal.
I would accordingly allow
Mr. Karugire’s argument on this point and disallow, respectfully, Mr.
Babigumira’s. I do so.
In the result, for reasons stated above,
this application fails. It is dismissed with costs to the Respondent. Since
the Respondent
has already filed a defence in the main suit, the case shall be
set down for a scheduling conference on 17/2/2006 at 10 a.m. It
is so
ordered.
Yorokamu Bamwine
J U D G E
28/11/2005
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