Kirungi v Centenary Rural Development Bank Limited (Miscellaneous Application 38 of 2022) [2025] UGHC 101 (24 January 2025)

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA HOLDEN AT HOIMA MISC. APPLICATION NO. 038 OF 2022

(Arising from Civil Suit No. 070 of 2022) (Formerly Masindi High Court Civil Suit No. 057/2022)

### KIRUNGI ABUDU::::::::::::::::::::::::::::::::::: VERSUS

### CENTENARY RURAL DEVELOPMENT BANK LTD:::::::RESPONDENT

### BEFORE: HON. JUSTICE BYARUHANGA JESSE RUGYEMA

## **RULING**

- In this application brought under S.98 CPA, 0.36 rr.3 &4 & O.52 rr 1 $\lceil 1 \rceil$ **& 3 CPR,** the Applicant is seeking the following orders: - (a) That the Applicant/Defendant be granted unconditional leave to appear and defend Civil Suit No. 057 of 2022. - (b) That costs of this application be provided for. - The application is supported by an affidavit deposed by the $[2]$ Applicant/Defendant wherein the grounds of the application are contained and opposed by an affidavit in reply to the application deposed by a one Ronald Sekidde, the Respondent's Chief Manager, Legal Services.

# **Background:**

- The Respondent/Plaintiff filed a summary suit vide H. C. C. S. No. 057 $[3]$ of 2022 against the Applicant/Defendant herein seeking for the recovery of a sum of Ugx. $305,758,337/$ = allegedly being the loan balance advanced by the Respondent to the Applicant plus, costs of the suit. - It is against this background that the Applicant brought this $[4]$ application seeking unconditional leave to defend the Respondent's suit on grounds, inter alia:

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- (a) That on the $30<sup>th</sup>$ day of May 2019, he applied for a credit facility of Ugx. $245,000,000/$ = from the Respondent/Plaintiff which he secured with a mortgage created over his property comprised in Buyaga Block 48, Plot 126, Kyamajaka, Muhorro Town Council, Kibaale and LRV/FRV HQT 973 Folio 10, Buyaga Block 49, Plot 11, Kyamajaka, Muhorro Town Council, Kibaale. - (b) That upon securing the above mentioned credit facility, he started servicing the loan as agreed in the mortgage deed and settle the credit facility thus he is not indebted to the Respondent/Plaintiff in a sum of Ugx. $305,758,337/=$ . - (c) That the Applicant/Defendant has good and meritorious defence to the suit with a high likelihood of success because when he was servicing the said facility, some of the deposits were not credited on his account by the Respondent/Plaintiff bank, that the Respondent/Defendant bank ignored and/or refused his request to carry out a forensic audit on his account, the Respondent bank charged him exorbitant interest and penalties which were over and above lending apex interest rate, Covid-19 pandemic led to the closure of all business worldwide and lastly that the Respondent/Plaintiff bank took advantage of the fact that he is an illiterate person who does not know English and made him execute a mortgage deed which was not translated or interpreted to him with the intention of defrauding him. - (d) That there are triable issues of fact and law for determination by this court to wit: - $(i)$ Whether there $is$ valid mortgage between the $\overline{a}$ Applicant/Defendant and the Respondent/Plaintiff. - Whether the Applicant/Defendant is indebted the $(ii)$ to Respondent/Plaintiff to the tune of $Ugx. 305,758,337/=$ as claimed in the plaint. - (iii) Whether the Respondent/Plaintiff's suit is improperly before this court. - (iv) Whether the Respondent/Plaintiff is entitled to the interest of 23% and penal interest of 5% as claimed in the plaint. - That it is in the interest of equity and substantive justice that $(e)$ this application is granted.

- The Respondent/Plaintiff opposed the application on the following $[5]$ grounds: - (a) That the Applicant was and continues to be indebted to a tune of **Ugx**. $305,758,337/$ = as at the time of instituting the main suit, being the outstanding balance for the loan consisting of both the principal and the interest. - (b) That the Applicant have neither serviced nor settled the credit facility that was offered to him by the Respondent bank because all sums received for purposes of servicing the loan facility were all credited onto the Applicant's account and therefore the Applicant's allegations are baseless with no evidence to prove the same since the Applicant has not supplied any specification as to the uncredited amounts. - (c) That the Applicant is therefore abusing court process as he intends to curtail and retard the recovery process of the owed sums by the Respondent and that therefore, the Applicant's claim raises no trial issues to be determined by this court. - (d) That is in the best interests of justice that this application is dismissed with costs.

# **Determination:**

# Applicant's preliminary objection.

(a) The main suit before this court is premature:

- Counsel for the Applicant submitted that the present suit is not only $[6]$ prejudicial but also malicious and legally improper for the Respondent to have commenced the main suit for recovery of outstanding loan monies against the Applicant before realising the securities in her custody contrary to Ss 20 and 21 (1) (d) of the Mortgage Act, 2009. - Counsel for the Respondent submitted that under S.21 (1) (c) of the $[7]$ Mortgage Act, the mortgagor has liberty as to which remedy to opt for in order to recover the outstanding sums and as such, the Applicant's preliminary objection should be dismissed. - I agree with the position of the law as put by Counsel for the $[8]$ Respondent. Whereas it is true and correct that S.20 of the Mortgage

Act provides for realisation of the security if it is land as one of the remedies of the mortgagee where there is default by the mortgagor and the money secured by the mortgage has become payable in full, it is not correct that the mortgagee should first exercise the right/remedy before giving recourse to commencement of a suit for recovery against the mortgagor. It is therefore not uncommon for the mortgagee to apply to court for an order to realise the security where in some cases the realisation of the security is found problematic.

- S.21(1) of the Act provides for the mortgagee's action for money $[9]$ secured by mortgage. The mortgagee may sue for the money secured by the mortgage only on the following cases; - (a) Where the mortgage deed provides that if there is default by the mortgagor, the money secured by the mortgage becomes payable in full: - $(b)\dots$ - $(c)$ ... - (d) where the mortgagee is deprived of the whole or a part of his or her security or the security is rendered insufficient through or in consequence of the wrongful act or default of the mortgagor. - [10] From the above provisions of the Act, the mortgagee has liberty to choose which remedy to opt for, including court action in consequence of the wrongful act or default of the mortgagor to recover the outstanding sums. In the premises, this preliminary objection is found devoid of any merit and it is accordingly dismissed.

# **Respondent's preliminary objections:**

Filing of submissions outside the time prescribed by court. $(a)$

[11] Counsel for the Respondent relying on the authority of Monica D/o Dickson vs Hussein, P. C Civil Appeal No. 4 of 2019 submitted that in utter violation of this court's directives, the Applicant filed submissions more than a month without seeking the leave of this court to file the submissions out of time and therefore, the Applicant's submissions should be struck off record for being filed out of time.

$\overline{4}$

## [12] Under **O.51 r.6 CPR**,

"Whereas a limited time has been fixed for doing any act or taking any proceedings under these Rules and by Order of the court, the court shall have power to enlarge the time upon such terms, if any, as the justice of the case may require, and the enlargement may be ordered although the application for it is not made..."

[13] In Guliano Gariggio vs Claudio Casadio S. C. Civil Application No. 01 of 2013 where court was referring to the rules applicable to the supreme court but which I find offer guidance or are instructive to this court as regards **O.51 r.6 CPR**, extension of time for doing an act so authorised or required may be granted namely:

- a) Before the expiration of the limited time, - b) After the expiration of the limited time, - c) Before the act is done, - d) After the act is done. - [14] In the instant case, it is true that the Applicant's Counsel filed his submissions outside the time that was given by this curt. This was definitely an omission or mistake or inadvertence on part of the Applicant's Counsel. It is however now settled that an omission or mistake or inadvertence of Counsel ought not to be visited onto the litigant, Elizabeth Kobusingye vs Annet Zimbiha C. A. C. A. No. 245 of 2019. - [15] In this case, where the submissions are already on record albeit lately filed, the extension of time has the legal effect of validating them or excusing their late filing. The Respondent had the opportunity to reply them which her counsel did by way of filing the Respondent's additional submissions in reply. Art. 126 2(e) of the Constitution enjoins courts to do substantive justice without undue regard to technicalities. In this case, I find that the late filing of submissions by the Applicant did not in any way prejudice the Respondent who had the opportunity to respond to them. - [16] As a result of the totality of the above, I do find that the court may in its discretion, on application or on its own motion give leave or extend time for the doing of an act notwithstanding the fact that no

application was made and in the premises, I do accordingly extend time for filing of the Applicant's submissions which are already on record and the Respondent has had an opportunity to respond to them, thus, this objection is accordingly dismissed.

# Merits of the application.

[17] The consideration for the grant of unconditional leave to appear and defend were laid down in Maluku Interglobal Trade Agency vs B. O. U. [1985] HCB 65, briefly as whether the Applicant has a bonafide triable issue of fact and law and whether the Applicant has reasonable grounds of defence to the claim in the following words:

"Before leave to appear and defend is granted, the defendant must show by affidavit or otherwise that there is a bonafide triable issue of fact or law. When there is a reasonable ground of defense to the claim, the plaintiff is not entitled to summary judgment. The defendant is not bound to show a good defense on the merits but should satisfy the court that there was an issue or question in dispute which ought to be tried and the court shall not enter upon the trial of issues disclosed at this stage".

- [18] The Applicant must therefore show with evidence that he has good defense on the merits or that there is a dispute which ought to be tried or a real dispute as to the amount claimed by the Respondent which require determination by court. It is therefore not a matter of merely the Applicant pleading or stating that he or she has a plausible defense but he/she must adduce and or show evidence in his affidavit leading to that plausible defense. - [19] In the instant application, the Applicant's grounds for leave to file a defence to the main suit are mainly that: - substantially serviced the loan facility The Applicant $(a$ advanced to him by the Respondent and that therefore, he is not in default. That it is only that some of the deposits made his $account$ $\mathbf{b}\mathbf{v}$ the him $were$ not credited $\overline{on}$ $\mathbf{b}\mathbf{v}$ **Respondent/Plaintiff bank and when** he requested for

auditing of his account, the Respondent bank refused and or ignored his request.

- [20] The Applicant however did not attach to his application and affidavit any evidence that deposits made by him were not credited on his account by the Respondent/Plaintiff bank and or provide any specifications as to the uncredited amounts. The Applicant has also not provided any evidence that he requested for the auditing of his account and the Respondent bank refused and or ignored his request. - That the Respondent bank charged the Applicant exorbitant $(b)$ interest and penalties which were over and above the lending apex interest rate. - [21] The Applicant has not nevertheless provided court what the apex interest rate is or whether the interest and penalties are outside the loan agreement/mortgage he entered into with the Respondent. - That Covid-19 pandemic led to the closure of all businesses $(c)$ worldwide but the Respondent bank continued to exorbitantly charge the Applicant despite the directive of Bank of Uganda to re-schedule. - [22] Again, there is no evidence adduced by the Applicant in support of this claim. There is no evidence that was provided by the Applicant that he requested for the re-scheduling of the loan as a result of Covid-19 pandemic and the re-scheduling was rejected thus causing him to default in repayment of the loan facility. - That the Respondent took advantage of his being illiterate $(d)$ (who does not know English) and was made to execute a mortgage deed which they did not translate or interpret to him with the intention of defrauding him. - [23] Lastly, the Applicant has not adduced evidence to prove that he is an He is not contesting the application he made to the illiterate. Respondent bank which he personally filled in English. It is not in dispute that he was given a loan facility of Ugx. $245,000,000/$ = at a given interest rate. The Applicant upon the help of his Counsel in understanding the mortgage has not highlighted to court any of the

provisions of the mortgage which prejudice him or which if had been explained to him he would not have executed the agreement.

[24] As a result of the above, I do find that the Applicant has not provided reasonable grounds of defence to the suit. This application is intended to defeat the interests of the Respondent recovering the outstanding amount of money. The Applicant as such does not have a plausible defence and his intended written statement of defence does not raise any bonafide triable issues for this court to determine. The application for grant of unconditional leave to appear and defend is accordingly dismissed with costs.

Dated at Hoima this 24<sup>th</sup> day of January, 2025.

**Byaruhanga Jesse Rugyema**

**JUDGE**