Freightline Limited v Astral Alanda International Limited (Civil Suit 73 of 1989) [1992] UGHC 37 (17 February 1992)

Full Case Text

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KaMPjlLa

## CIVIL SUIT NO. 73/1989

FREIGHTLINE LIMITED PLAINTIFF

VERSUS

'•»

ASTRaL ALaNDa INTERNATIONAL LTD. ::::::::::: DEFENDANT BEFORE:. The Honourable Mrst Ag. Justice M» Kireju.

*. 1 • 1*

## R ULIN G.

This •:is an application by way of Notice of Motion under Order 33 rule 4 and Order 48 of the Civil . Procedure Rulesr s-eeking an order for unconditional leave to appear and defend the suit.

The respondenr/plaintiff's case is that by a written agreement dated 8/9/89 the plaintiff at the request and instance of the defendant lent Uganda Shillings *J,j60,000/-* to the defendant and the defendant, undertook to pay the said sum within thirty days from, the signing of the agreement. The defendant has failed orxneglected to pay the.said sum hence the suit by the plaintiff under Order 33. • of C-. P. R.

At the hearing of this application Mr. Lwere counsel for the applicant submitted that he was abandoning the grounds stated in the affidavit in support of the application and was going to argue his application on points of law. He submitted that, the loan agreement was illegal as it contravenes the M 3ney Render's Act and the Exchange Control Act S. 1(4)(a) as amended by Decree 18/72. That it was tfue that the plaintiff company has as one of its objectives, a clause empowering it to lend money but that at the time of the agreement the company was not in possession of n^oney lenderTs licence ass required under S.3 of the Money lender's Act. He contended

that the loan agreement is therefore a nullity and any subsquent action brought upon the agreement is void and of no legal effect. He referred me to the case of Naks Ltd. Vs. S. Kyobe Senyange /1982/ H. C. B 52 where Justice Kityo held that since the plaintiff had no money lending licence, any agreement or contract so made, in default was illegal and could not be enforced by courts of law on the basis of the maximum ex turpi causa oritior non action. He invited me to follow the above ruling since that case was almost similar with the present case.

Counsel also contended that from the wording of Annexture 'A' to the plaint, that it was abundantly clear that the loan was in United States Dollars. He submitted that the plaintiff company is resident in Uganda and did not get the permission of the Minister of Finance $\angle$ scarry out the foreign currency transaction as required under $S_0(4)(a)$ of Exchange Control Act as amended by Decree 18'72. That the contravention did not make the agreement void but it was also criminal and court cannot entertain a matter which is criminal. He prayed that the plaintiff's application should therefore be struck off for the above reasons.

Mr. Elue, counsel for the respondent/plaintiff submitted that the application for leave to appear and defend should be dismissed with costs as the applicant did not advance any cogent a reasons in support of the application. He submitted that the points of law raised did not have any merit. That the money lenders Act referred to has no application to the facts of this case as the act only applies to persons carrying on business of money lending, and that this implied repeated actions and did not apply to single acts. He contended that the loan in this case was a friendly loan and not a business one as there was

$.../3$

no interest charged\*

On the point that the agreement contrav;aes the Exchange Control act, counsel submitted that the provisions of that Act have no application to facts of this case. That clause (a) of the agreement did not mean that the parties intended to deal in United States dollars, that the dollar was used as a unit of account and that the Act did not forbid people to use foreign currency as a unit of account. The use of hard currency protects people from inflation. And that it was trite law that where foreign currency is used, the exchange rate is the rate prevailing at the time of 'payment. The intention of the parties was that at the time of payment, the T sum would be paid in Uganda Shillings but the equivalent of U. S. dollars 5600 and this he submitted did not make the agreement illegal. Counsel prayed that since the applicant has abandoned his affidavit and the points of lav/ he has rais-ed did not support his application, that the application for unconditional leave to appear and defend be dismissed with costs and judgement be entered for the plaintiff.

Mr. Lwere in response submitted that from the submission put forward by couhsel for the respondent, it was evident that there were triable issues, if the suit is not dismissed this would warrant the applicant to put in his defence.

Having heard the submissions by both counsels, the issue now is whether the defendant has a good defence and ought to be permitted to appear and defend the sui-t\*. . The facts to be taken into account when considering this application! were laid down in the'case of Muluku Interglobal Trade Agency Ltd. Vs\*.. Bank of Uganda 1983 HCB 63 by Justice Odoki. The defendant must show by affidavit or otherwise that there is a

bonafide triable issue of fact or law. Where there is reasonable ground of defence to the claim, the plaintiff is not entitled to summary judgement. 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 should not enter upon the trial of the issue or issues disclosed.

Another test is whether the defence raises a real issue and not a shap, one in the sense that if the facts alleged by the defence are established there would be plausible defence. On the other hand leave can be refused only in those cases where even upon the facts alleged by the defendant the plaintiff must succeed i.e. where the defendant has no defence at all,

Applying the above principles to the present application, I am of the view that the applicant has presented two triable issues on point of law which cannot be determined in a summary manner. As already stated the court at this stage is not expected to enter into the trial of the issues disclosed and I am not going to do that now.

I have found that the defendant has got a reasonable ground of defence and therefore leave to defend will be granted unconditionally.

I accordingly grant the application as prayed.

The defendant/applicant is to file his written statement of the defence within seven (7) days of the date hereof and let the case be set down for hearing on merit. Costs in the cause.

I so order. Other cases referred to;- ) Souza Figuerido & Co. Ltd. Vs. Moorings Hotel Co. Ltd 1959 EA 425 $(1)$ Adenensi Rwamukunyu Vs. Robert B. B Kiiza Civil Suit No. 245/1987 $(2)$ Uganda Commercial Bank Vs. Bijaaba Mixed Farm Ltd. 08 20170/20 $(3)$

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## Civil Suit No. 770/90.

M. KIREJU Ag. JUDGE. $17/2/1992$

$21 - 2 - 92$

Ruling Delivered.

Mr. Lwere for the applicant.

Miss. Donart Nakiwendo - Court Clerk

Mr. Elue for the respondent absent.

M. KIREJU

Ag. $J U D G E$ . $21/2/1992.$