Kare Distribution Limited & Another v Africa Rivers Fund (Miscellaneous Application 2099 of 2023) [2024] UGCommC 281 (7 March 2024)

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCTAL COURT DTVTSTON) MISCELLANEOUS APPLICATION NO.2099 OF 2023 (ARTSTNG FROM MTSCELLANEOUS APPLTCATTON NO. 1270 OF 2023) (ARTSTNG OUT OF CrVrL SUrT NO. 700 OF 2019) I. KARE DISTRIBUTION LIMITED 2. GEOFFREY KAREGYEYA APPLICANTS VERSUS AFRICAN RIVERS FUND:::::::::::::::::::::!:::::::::::::::::::: RESPONDENT BEFORE HON. LADY JUSTICE ANNA B. MUGYENYI

## RULING

This Application was brought by way of Notice of Motion under order 44 Rule 2, <sup>3</sup> & 4 and order 52 Rule I of the civil Procedure Rules S.l No. 7l-1(cpR) & Section <sup>98</sup>of the civil Procedure Act cap 71 (cPA) for orders that the Applicants be granted leave to appeal the court's ruling in High court Miscellaneous Application No <sup>1270</sup> of 2023 arising from the counterclaim in civil Suit No 700 of 2019, and that costs ofthe application be provided for and be in the cause.

This Application was supported by the Affidavit in support and rejoinder of Geoffrey Karegyeya the 2nd Applicant and opposed by the Affidavit in reply of Timothy Lugayizi an Advocate from IWs MMAKS Advocates.

### BACKGROUND

The Applicants filed Miscellaneous Application No 1270 of 2023 before this court seeking orders that the parties be allowed to amend their counterclaim and reply to the counterclaim, the Respondents/counterclaimant be ordered to produce certified

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copies of their account statements with Barclays Bank Mauritius, and their money license, a declaration that the advertisement of the suit property before determination ofthe counterclaim amounts to contempt of Court, an order stopping the Respondent from selling the suit properties until the final hearing and determination of the matter and an order regarding the conclusion of pleadings. The court while determining the said application dismissed all the grounds of the application with costs to the Respondent and the Applicant thus filed an Application for leave to appeal against the decision of the Court in Miscellaneous Application No 1270 of 2023

#### REPRESENTATION

The Applicants were represented by the 2"d Applicant whereas the Respondent was represented by M/s MMAKS Advocates.

#### SUBMISSIONS

The 2nd Applicant referred the court to their aftached memorandum of appeal and submitted that they are seeking to appeal to the court ofappeal on three issues that is; the order of this court declining to discover the Respondent's bank account, whether it is legal for a company to lend money in Uganda without a money lenders license, whether the court was right to decline to stop the sale and entertain the Respondents with the counterclaim. The 2nd Applicant relied on t}re cases of Sango Bay Estate vs Dresdner Bank and Attorney General to discuss the principle for grant of leave to appeal, Swain v Hillman, Kengazi Angella v Meti (U) Ltd, and Ojara otto Julius v okwera Benson to state the requirements court considers in granting leave.

The 2nd Applicant submitted that the dispute before the court is a commercial one between banks that needs clear evidence, documentation and the disbursing account

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must be examined against the receiving bank. He averred that the Respondent has not despite being written to provided their money lenders license and their certificate of incorporation and prayed for the Application to be allowed.

Counsel for the Respondent submitted that the Applicants have not met the criteria for the grant of leave to appeal and no serious questions that need further consideration by the Court of Appeal have been made. Counsel discussed the grounds of appeal raised by the Applicant in his memorandum of appeal and submitted that about the issue of certificate of incorporation, the Court already pronounced itself stating that those are matters of evidence. He averred that the person who signed all the letters and agreements between the parties testified before this Court and the Applicant had an opportunity to cross-examine him but waived his right when he walked out of the hearing of the counterclaim.

In respect to whether the Respondent is licensed, counsel for the Respondent relied on the case of Ham Kiggundu & 2 others v Diamond Trust Bank & Anor and submitted that the Supreme Court pronounced itself on the legality of foreign unregistered entities in Uganda lending to local entities. Counsel averred that the counterclaim is a money claim and does not in any way seek for determination of any property rights,

In rejoinder, the 2nd Applicant submitted that the case of Ham Kiggundu is distinguishable from the current case as it is about financial institutions, not any other company or money lender, and submitted that African Rivers Fund is not a company or money lender but is only a name. He denied all the averments made during submissions by the Applicant.

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#### RULING

I have read the pleadings and considered the oral submissions made by both parties in the making of this decision. It should be noted that a brief Ruling dismissing this Application was made on 7th November 2023 and the Court informed the parties that a detailed one would be delivered later hence this Ruling.

During the hearing of this case, the Applicants raised a presumed preliminary objection that the loan agreement from which the plaintiffs claim is arising is illegal and unenforceable and the counterclaim therefore collapses on that ground. Even with severe guidance from this Court, the 2nd Applicant was hesitant to proceed with this application and the Court found that his preliminary points of law were not relevant to the present application as his submissions in respect to the said preliminary objection were conceming the counterclaim in the main suit which was heard on 301h of October 2023. During the hearing of the counterclaim, he opted to leave the courtroom and therefore, lost his opportunity to cross-examine the witnesses on those issues. The preliminary objection was overruled and the parties were asked to proceed with the Application for Leave to Appeal.

The Applicants in their pleading averred that the implication of the dismissal of Miscellaneous Application No. 1270 of 2023 is that the Respondent has been declared a winner in the counterclaim in Civil Suit No. 700 of 2019, without ever adducing any evidence to prove its claims before the Court and thus the Applicants have been condemned unheard. The Applicants averred that the Counterclaim in Civil Suit No. 700 of 2019 ought to be heard on its own merits and that rhe Applicants herein ought to be given a right to a fair hearing by granting access to the relevant account statements relating to Account No. 7073985 held with Barclays Bank Mauritius Ltd which they declined to produce to date. It was the 2nd

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Applicant's averment that the Applicants are likely to incur irreparable damages once the mortgaged property is sold since the Respondent has not ceased with the attempts of selling the same and there has not been any inordinate delay in filing the present application.

The Respondent averred in their pleadings that this Application is a continuation of the Applicant's flagrant abuse of the court process. He averred that the Applicant waived their right to cross-examine when upon dismissal of Miscellaneous Application, No. 1270 of2023, the court fixed the counterclaim for hearing on the 30th october 2023, the Applicant asked the Judge to recuse herself and upon ruling that there was no basis for recusal, the Applicant stormed out of court and the proceedings continued, evidence taken and the case was closed. He further averred that no basis has been set out for the grant of leave to appeal as the Applicants' contention is based on beliefas opposed to any legal basis for the grant ofleave and the fact of the Applicant borrowing, purchasing property using the borrowed money and pledging ofpurchased property to the Respondent has not been denied.

The law governing an application for leave to appeal is provided for under order 44 Rule 2 of the CPR thus:

"An appeal under these rules shall not liefrom any other order except with leave of the court making the order or of the court to which an appeal would lie if leave were given " .

In the case of sango Bay Estate v Dresdner Bank & Attorney General [l97ll EA I7 Spry v'P. stated the principle upon which an application for leave to appeal may be granted as follows:

"As I understand it, 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, but where, as in the present case, 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. "

Leave to appeal will be given where the court considers that the appeal would have a prospect ofsuccess or there is some compelling reason why the appeal should be heard. (Musa Sbeity & Anor v Akello Joan & Anor HCMA No 249 of 2018).

The same principle was alluded to by the Supreme Court of Uganda in G. M. Combined (U) Ltd v A. K. Detergents (U) Ltd Civit Appeal No. 23 of 1994 and subsequently followed by Mukasa Lameck J, in the Alley Route Ltd v UDB HCMA No. 634 of 2006 (2), followed by Hellen Obura J. (as she then was) in Tusker Mattresses (U) Ltd v Royal Care Pharmaceutical Ltd HCMA No. 258 of 2011, and subsequently followed in decision of the Court of Appeal in Degeya Trading Stores (U) Ltd v Uganda Revenue Authority CACA No. 16 of 1996, where their Lordships individually stated that:

"An applicant seeking leave to appeal must show either that his intended appeal has reasonable chance ofsuccess or that he has arguable grounds ofappeal and has not been guilty of dilatory conduct " ,

In the case of Swain v Hillman [200111 ALL ER 91, the Court stated that a real prospect of success means the prospect for the success must be realistic rather than fanciful. The court considering a prospect for permission is not required to anallze whether the grounds of the proposed appeal will succeed but merely whether there is a real prospect ofsuccess.

Therefore, to grant leave to appeal, the main issue for determination is whether there are sufficient grounds that merit judicial consideration and that the appeal has <sup>a</sup> prospect of success.

For this application to succeed, the Applicants need to satisfi this Court that there are matters, whether of law or facts, that deserve to be addressed by the Appellate court in the intended Appeal. These include showing how this court misdirected itself or erred in law or fact or in both law and fact while making the decision the intended appellant is dissatisfied with.

In the instant case, the orders sought to be appealed against were made in Miscellaneous Application No.1270 of 2023 which was, firstry, in regards to amending the counterclaim and its reply under order 6 Rule l9 cpR, and the court found that the matter of amendment was not proper and was not in conformity with the principles goveming amendment of pleadings as the application had been made malafide and will occasion an injustice to the Respondent since what is sought to be introduced are matters of evidence that will be canvassed during hearing.

The Ruling and orders were, secondly, in regards to the issue of discovery under order I 0 Rules 12- I 9 and order 41 Rule I cpR, to wit court held that the prayers as to the discovery of bank statements is a matter of evidence that will be dealt with during the hearing of the main suit.

The Ruling and orders were, thirdly, in regards to the issue of whether the advertisement of the property by the Respondent before prosecution and determination of the Counterclaim amounts to contempt of court and the court held that claims of contempt of court by the Applicants against the Respondent have not been proved.

Lastly, the Ruling and Order was for the Court to use its powers to stop the sale of the mortgaged property and the Court found that the same had been dealt with by this Court in the Application for temporary injunction and is therefore res judicata.

In the instant case, it is clear that the Applicants intend to raise issues that were supposed to have been raised in the hearing of the counterclaim in Civil Suit No.700 of 2019, which the 2"d Applicant unfortunately, decided to opt out of, even when Court had granted him the opportunity to proceed with the scheduling conference while his new lawyer would come on board in the next hearing. The grounds of appeal raised by the Applicants stem from well-reasoned decisions by this very Court in the various applications, which this Court does not find it necessary to regurgitate. I, therefore, find that the Applicants want to use the court's discretion to allow leave to appeal on issues the 2nd Applicant withheld from submitting during the hearing of the counterclaim, thus rendering this matter not a proper case for leave to appeal to be granted.

I find that the Applicants have failed to raise grounds of appeal that merit senous judicial consideration and have failed to prove that their appeal indeed has a high chance ofsuccess. I, therefore, find that the Applicants have not proven any of the required ingredients for this Court to grant leave to appeal its earlier decision as no sufficient grounds have been raised by the Applicants.

This Application is accordingly dismissed with costs to the Respondent.

Before I take leave of this matter, I wish to point out that through all these various applications filed by the Applicants, he had ample time to find a new lawyer and prepare his pretrial documents for the Counterclaim. However, on the very day of the hearing, he decided to leave the Court during the scheduling conference and lost

his opportunity to cross-examine the Respondent's witness. Indeed, it was the only possible way and right procedure for the Applicants to introduce the alleged issues of the money lending license, the missing account and bank statements and show that indeed no money was disbursed to the I'r Applicant's account from the Respondent bank to court and put the same to the said witness, if at all but that did not happen.

Finally, I wish to point out that the 2"d Applicant's decision to leave court on the 3Oth october 2023 prevented him from hearing the Respondent/counterclaimant's case and opening the Applicant's/Counter Respondents' case and addressing matters of evidence in his claim; and the present Application is yet another ploy by the Applicants to delay the delivery of the judgment in civil Suit No.700/2019 to the prejudice of the Respondent. This court will not sanction what is intended to delav justice and abuse the court process.

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HON. LADY JUSTICE ANNA B. MUGENYI