DFCU Bank Uganda Limited v Muwanga & Another (Originating Summons 7 of 2024) [2025] UGCommC 70 (20 January 2025)

Full Case Text

#### THE REPUBLIC OF UGANDA

## IN THE HIGH COURT OF UGANDA AT KAMPALA

#### [COMMERCIAL DIVISION]

## ORIGINATING SUMMONS NO. 0007 OF 2024

DFCU BANK UGANDA LIMITED::::::::::::::::::::::::::::::::::::

#### **VERSUS**

### I. PAUL MUWANGA

# 2. BERNARD BYAMUKAMA:::::::::::::::::::::::::::::::::

## **BEFORE: HON. LADY JUSTICE ANNA B. MUGENYI**

## RULING ON PRELIMINARY OBJECTION

#### Introduction

This suit was brought by Originating Summons under Order 37 Rules 1(a), 4, and 8 of the Civil Procedure Rules, Section 98 of the Civil Procedure Act, and Section 33 of the Judicature Act. The suit was brought for the determination of the following questions:

- 1. What are the rights of the parties in property comprised in Kibuga Block 13, Plot 391 at Najjanankumbi and Kibuga Block 13, Plot 88 I at Najianankumbi? - 2. Whether the Plaintiff is entitled to foreclose and sell the property to recover the sums due and owing to it as well as the related foreclosure costs and expenses? - 3. Whether the Plaintiff is entitled to the costs of the suit?

The Originating Summons was supported by the affidavit of Lilian Kyobutungi Mbugano, the Special Assets Manager of the plaintiff and opposed by the affidavit in reply of Paul Muwanga, the 1st defendant.

The plaintiff was represented by $M/s S \& L$ Advocates whereas the 1st defendant was represented by Murangira, Kasande & Co. Advocates.

During the hearing of the case, counsel for the 1st defendant brought it to the attention of this Court that they intend to raise preliminary objections as stipulated in their reply to the Originating Summons. This Court then directed the parties to file written submissions.

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#### Decision

I have read the pleadings and considered the submissions of counsel for the plaintiff and the 1st defendant in respect of the preliminary objections raised by the 1st defendant. I will reproduce each preliminary objection raised and determine the same accordingly.

#### Preliminary Objection 1

## The suit is bad in law and is therefore null and void as it was wrongly and fraudulently brought to this court.

Counsel for the 1st defendant submitted that the Originating Summons served on them on the 30th of July 2024 was not signed and the affidavit in support of Lilian Kyobutungi was not commissioned. Counsel submitted that though new summons were served on them on the $2^{nd}$ of September 2024, the same was signed by the deputy registrar as opposed to the Judge who is envisioned under the rules, and that the same has Lilian Kyobutungi's forged signature. Counsel submitted that the Originating Summons filed contravened Order 37 Rule 8 of the Civil Procedure Rules and is therefore a nullity. Counsel further submitted that the Originating Summons was not the first procedural step taken out by the plaintiff and is therefore contrary to Order 37 Rule 4.

Counsel for the plaintiff submitted that the Originating Summons on court record is supported by a duly commissioned affidavit and the number of the suit was sufficiently brought to his attention demonstrated by his filing of the reply with the correct number. Counsel further submitted that the duty of the litigant is to file and not to determine which court officer endorses the pleadings which is above the litigant's control. Counsel relied on the case of Simon Tendo Kabenge v Barclays Bank and Another SCCA No. 17 of 2015 and the case of Nabanjala Gorret v Nabukalu Hellen M. A. No. 250 of 2015 that held that omissions of the court should not be visited on the litigant.

#### Order 37 Rule 8 (2) of the CPR provides that:

"The person entitled to apply shall present it ex parte to a judge sitting in chambers" *with an affidavit setting forth concisely the facts upon which the right to the relief* sought by the summons is founded, and the judge, if satisfied that the facts as alleged are sufficient and the case is a proper one to be dealt with on an originating summons, shall sign the summons and give such directions for service upon persons or classes of persons and upon other matters as may then appear necessary."

The summons served on the 1st defendant is seen to have been signed by the Deputy Registrar for the Judge. The affidavit in support is seen to have been signed by the deponent and commissioned.

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Though the order anticipates that the summons should be signed by a Judge, the mistakes of the court cannot be visited on the litigant whose role was to file the pleadings. Further, in a bid to curb backlog, registrars who are clothed with the mandate to execute administrative duties sometimes sign such pleadings for the Judge.

I therefore overrule this preliminary objection.

#### Preliminary objection 2

## Whether the plaintiff did not pay court fees and therefore the documents filed are a nullity

Counsel for the 1st defendant submitted that the plaintiff never paid court fees by the time they filed the suit on the 30th of July 2024 therefore the documents filed are a nullity.

Counsel for the plaintiff submitted that the fees for the suit were duly paid and referred this court to the ECCMIS printout and the URA printout showing the status of payment.

A review on ECCMIS shows that the plaintiff paid fees on the 25th of January 2024 of Ugx 6,000/= as court fees and on the $20^{\text{th}}$ of February 2024 paid Ugx $3,517,000/$ = and the purpose for the said payment was still court fees.

I, therefore, find that the court fees were duly paid. This preliminary objection is overruled accordingly.

#### Preliminary Objection 3

#### This suit is bad in law for the misjoinder of defendants.

Counsel for the 1st defendant submitted that the 2nd defendant sued the 1st defendant in this same court in a similar matter as the instant cause of action and the plaintiff therefore has no cause of action against the 1st defendant for misjoinder of parties.

Counsel for the plaintiff submitted that there is no misjoinder as the 2nd defendant is joined to the suit as the registered proprietor. Counsel submitted that the plaintiff financed the purchase of the property by the 1st defendant from the $2^{nd}$ defendant by disbursing Ugx 1,800,000,000/= to Equity Bank where the property had been pledged as security and Equity Bank released the certificates of title to the plaintiff. Counsel submitted that the suit between the 1st defendant and the $2^{nd}$ defendant is purely a suit for recovery of money by the $2^{nd}$ defendant from the 1st defendant and has no bearing on the plaintiff's current suit to dispose of the suit property to recover its money.

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The main purpose of joining parties is to enable the courts to deal with matters brought before them and to avoid a multiplicity of suits. I do not see any misjoinder of parties in this case. The 1st defendant was part of the transaction that led to this suit because he was the one money was lent to and therefore, it was necessary for both the $1^{st}$ and $2^{nd}$ defendants to be a part of this suit.

This preliminary objection is overruled.

## **Preliminary Objection 4**

# The plaintiff has no legal cause of cause of action against the 1st defendant.

Counsel for the 1st defendant submitted that the plaintiff has no legal cause of action as there is no registered mortgage on the certificate of title to the suit land, which the plaintiff admitted in its affidavit in support.

Counsel for the plaintiff submitted that under paragraph 4 of the affidavit in support, it is stated that a mortgage is executed and the mortgage agreement is duly signed by the parties including the 1st defendant.

For a cause of action to be disclosed, it must be shown that the plaintiff enjoyed a right, the said right was violated and it was the defendant who violated that right. (Auto Garage v Motokov [1971] EA 514)

The plaintiff adduced evidence of a loan agreement between them and the 1st defendant where money was advanced to the 1st defendant and similarly attached a mortgage agreement between them and the 1st defendant where he undertook to mortgage the suit land. The 1st defendant has not denied being indebted to the plaintiff.

I therefore find that there is a cause of action disclosed against the $1^{st}$ defendant.

This preliminary objection is overruled accordingly.

### Preliminary Objection 5

## The suit was filed under the repealed laws and should be dismissed

Counsel for the 1st defendant submitted that this suit is brought under the repealed law that is the Civil Procedure Act (Cap 71) and the Judicature Act (Cap 13) which were revised and as such the suit is a nullity and should be dismissed.

The plaintiff submitted that none of the laws under which the suit was filed was repealed and none has been brought to the court's attention. Counsel submitted that the laws were rather revised and they came into force on the 1st July 2024 after the suit was filed on the 25th January 2024. Counsel submitted that the laws were revised after the plaintiff had filed its suit and this objection is therefore misguided.

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The instant case was filed as per the ECCMIS record on the 25th January 2024. The 7th edition of the revised principal laws of Uganda came into force on the 1st of July 2024 after the instant case was filed. This case was filed before the law was revised. The revised law did not repeal the Civil Procedure Rules.

I, therefore, agree with the submissions of counsel for the plaintiff. This preliminary objection is accordingly overruled.

### Preliminary Objection 6

Whether the affidavit in support sworn by Ms Lilian Kyobutungi Mbugano is a nullity for lack of a registered resolution.

**Order 29 Rule 1 of the CPR** stipulates that:

"In a suit by or against a corporation, any pleading may be signed on behalf of the corporation by the secretary or by any director or other principal officer of the corporation who is able to dispose to the facts of the case".

Under paragraph 1 of the affidavit in support, Ms. Lilian Kyobutungi states that she is the Special Assets Manager-Recoveries of the plaintiff and further states in paragraph 2 that by virtue of her employment, she is well versed with the facts pertaining to this case.

The deponent by virtue of her position is a Manager for Special Assets Recoveries in the plaintiff bank and as stated in her affidavit is well-versed with the facts pertaining to the case. I therefore find that she is a principal officer in the company with the authority to swear the affidavit on behalf of the company without a registered resolution.

This preliminary objection fails accordingly.

### Preliminary Objection 7

## The issues disclosed in the affidavit in support of this impugned suit do reflect complex matters. The procedure of bringing this suit by originating summons is not meant to deal with complex matters.

Counsel for the 1st defendant submitted that originating summons is a procedure only adopted in matters that are simple and straightforward and that cannot apply where a suit relates to disputed facts and complicated matters of law. Counsel further submitted that the declarations and orders being sought in this suit are not attainable under the originating summons as the matters between the parties are complex and the plaintiff ought to have commenced the suit by an ordinary plaint.

Counsel for the plaintiff submitted and relied on Order 37 Rules 4 of the CPR and the case of DFCU Bank v Uganda Signs Ltd & 2 Others where it was held

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that the procedure for foreclosure of the mortgagor's equity of redemption is through Originating Summons.

Counsel for the Plaintiff further submitted that no attempt has been made by the 1st defendant to demonstrate the alleged complexity in the plaintiff's claim. Counsel submitted that the questions to be determined are simple questions which relate to the rights of the parties in property comprised in Kibuga Block 12 plots 391 and 881 and whether the plaintiff is entitled to sell the said property to recover the money due and owing to it by the 1st defendant. Counsel contended that the 1st defendant's indebtedness is not an issue as he does not deny obtaining the loan facility but what remains for interpretation is the rights of the parties under the suit property.

# Order 37 rule 4 of the CPR provides that:

"Any mortgagee or mortgagor, whether legal or equitable, or any person entitled to or having property subject to a legal or equitable charge, or any person having the right to foreclose or redeem any mortgage, whether legal or equitable, may take out as of course an originating summons, returnable before a judge in chambers, for such relief of the nature or kind following as may be by the summons specified, and as the circumstances of the case may require; that is to say, sale, foreclosure, delivery of possession by the mortgagor, redemption, reconveyance or delivery of possession by the mortgagee."

In the case of Nakabugo v Serunjogi (1981) HCB 58, it was held that:

"It is trite law that when disputed facts are complex and involve a considerable amount of oral evidence, an Originating Summons is not the proper procedure to take".

Originating Summons are intended to enable simple and straightforward matters to be quickly resolved without the expense of bringing an action in the usual way. However, they are not meant to determine matters that involve disputed facts or serious questions.

Such Summons are meant to enable simple and speedy procedure and their merits are based on the fact that there are no pleadings involved or in general no witnesses to the questions for decision being raised directly by the Summons itself and the evidence given is by affidavit.

In the instant case, there are indeed mortgage agreements executed and signed between the plaintiff and the 1st defendant regarding the suit land marked as annexure "B" to the plaintiff's affidavit. However, the land title still bears the name of the 2nd defendant and there is no legal/registered mortgage entered onto the title by the plaintiff. What is seen to have been entered onto the certificate of title of the suit land is a caveat by the plaintiff in respect of the suit land. It is

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also not disputed by the parties that the certificate of title to the suit land is in the custody of the plaintiff.

The plaintiff insists that there is an equitable mortgage created whereas the 1st defendant contends that there is no mortgage that was created on the suit land. Though the 1st defendant does not dispute having borrowed the money, he asserts that the plaintiff is not a mortgagee.

I, therefore, find that the matter in question is complex with disputed facts which require evidence that must be put to the test through a full trial. Similarly, this matter requires the determination of the rights of the parties in relation to the land in dispute and therefore cannot be determined through Originating Summons but through an ordinary suit (plaint).

In conclusion and in light of all the above, all preliminary objections raised save for the last one are overruled. Having found that this is a matter that should have been brought by way of ordinary suit, this Originating Summons is dismissed accordingly.

Each party shall bear their own costs.

My Britative HON. LADY JUSTICE ANNA B. MUGENYI DATED...................................