Micro-Haem Scientifics & Medical Supplies Limited v Babirye (Miscellaneous Application 625 of 2024) [2024] UGCommC 222 (10 July 2024)

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISCELLANEOUS APPLICATION NO. 625 OF 2024 (ARISING FROM CIVIL SUIT NO. 330 OF 2024)** 10 **MICRO-HAEM SCIENTIFICS AND MEDICAL SUPPLIES LIMITED :::::::::::::::::::::::::::::::::::::::::: APPLICANT VERSUS**

# **BABIRYE AGNES ::::::::::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT**

## **BEFORE: HON. LADY JUSTICE PATIENCE T. E. RUBAGUMYA**

# 15 **RULING**

### Introduction

This application was brought by way of Notice of Motion under **Order 36 rule 3** and **Order 52 rules 1 and 2 of the Civil Procedure Rules SI 71- 1**, seeking orders that:

- 20 1. Unconditional leave be granted to the Applicant to appear and defend Civil Suit No. 330 of 2024. - 2. Costs of this application be awarded to the Applicant.

## Background

- 25 The background of the application is contained in the affidavit of Mr. Akwesigye Cedric the Applicant's Managing Director and is summarized below: - 1. That on 3rd May, 2019, the Applicant executed a Tenancy Agreement with the Respondent in regard to the premises comprised in LRV

- 5 1984 Folio 12 Plot 14 Martyrs Way, Kampala for a period of two years, commencing on 31st May, 2019. - 2. That the Applicant has at all times been engaged in the business of manufacturing, distributing and supplying medical supplies which 10 the Respondent was aware of. - 3. That the Applicant was permitted by the Respondent to carry out the required changes to the property to suit the Applicant's purposes and needs and the cost of the construction work was to be offset. 15 That the Applicant spent UGX 285,261,710/= equating to roughly USD 71,667 on the structural alterations. - 4. That despite the agreement to offset, the Applicant continued paying the full rental sums without deductions until 24th May, 2021 when 20 the Applicant elected not to renew its tenancy and requested for a meeting to discuss the offset or refund of the money spent on the structural alterations. - 5. That the Applicant's General Manager Mr. Nkwasibwe Hebert and 25 the Respondent and her colleague held a meeting to discuss the Applicant's request for a refund or offset. That the request was approved by the Respondent and following the approval, the Applicant elected to use the credit as rental sums for a further period thereby reversing its decision to vacate the premises. - 6. That the sum demanded by the Respondent amounting to USD 71,667 was offset against the cost of the structural alterations which equate roughly to USD 73,407 and thus the Applicant is not indebted to the Respondent for the sums so claimed.

5 7. That the Applicant has a plausible defence to the suit which raises triable issues of law and fact.

In reply, the Respondent opposed the application contending that:

- 1. The Respondent has never received any request or communication nor has she ever approved any request for improvements of the suit 10 property. That also, the Respondent has never had any meeting sessions with the Applicant. - 2. The Applicant was paying rent until it started defaulting in April, 2021 and that the receipts attached to the affidavit in support of the 15 application marked as "**C2**" are dated 2019, so there was no agreement relating to any improvements or offset. - 3. Under clauses 3 and 6 of the Tenancy Agreement, it was not the obligation of the Applicant to maintain the exterior and substantial 20 repair of the rental premises. - 4. The Applicant is indebted to the Respondent to the tune of USD 71,667 with interest and that it is not true that the Applicant made any improvements on the rental premises for the Respondent's 25 benefit or in line with the Tenancy Agreement. - 5. The Applicant has no plausible defence to the suit and that the application is full of illegalities, falsehoods and admissions to the remedies being sought in the main suit.

#### 30 Representation

The Applicant was represented by **M/s Sebugwawo & Co. Advocates** while the Respondent was represented by **M/s Sebbowa & Co. Advocates.**

5 The parties were directed to file their written submissions which they did and the same have been considered by the Court.

#### Issues for Determination

Following **Order 15 rule 5 (1) of the Civil Procedure Rules**, this Court

- 10 has rephrased the issues so raised to read as follows: - 1. Whether the Applicant has raised sufficient grounds to warrant the grant of unconditional leave to appear and defend Civil Suit No. 330 of 2024? - 15 2. What remedies are available to the parties?

# Issue No.1: Whether the Applicant has raised sufficient grounds to warrant the grant of unconditional leave to appear and defend Civil Suit No. 330 of 2024?

#### 20 Applicant's submissions

In his submissions, Counsel for the Applicant relied on **Order 36 rule 3(1) of the Civil Procedure Rules** and the case of *Maluku Interglobal Trade Agency Ltd Vs Bank of Uganda [1985] HCB 65* where it was held that for leave to appear and defend to be granted, the Applicant must prove 25 that there is a triable issue of law or fact or that he or she has a reasonable defence to the claim.

Referring to paragraphs **14, 15, 16 and 17**, of the affidavit in support, Counsel for the Applicant submitted that the Applicant's Managing Director Mr. Akwesigye Cedric alluded to the fact that several meetings 30 were held relating to the alteration of the suit premises and indeed the Applicant was permitted to alter the same. That also, the Applicant stated that it is not indebted to the Respondent since an offset was made arising

5 from the improvements. That on the other hand, the Respondent denied the occurrence of the meetings, the grant of permission to alter the premises and the improvements on the premises.

Counsel for the Applicant while relying on the case of *Total Uganda Limited Vs Thummin Trading Company [2011] eKLR,* in which the 10 Court held that summary judgment is to be granted only in the clearest cases and where there is no triable issue; averred that the facts in this instant case demonstrate several serious triable issues that cannot be merely proved by affidavit evidence but rather through a full trial, where both parties can fully lead their evidence.

- 15 Counsel further submitted that it is trite law that leave to appear and defend is not granted merely because there are several allegations of facts or law made in the application, the allegations must be investigated in order to decide whether leave should be granted or not. That this is done by stating the defence with sufficient particulars to appear genuine and - 20 annexing a draft defence to the application. Counsel relied on the cases of *Corporate Insurance Co. Ltd Vs Nyali Beach Hotel Ltd [1995-1998] 1 EA 7; Uganda Commercial Bank Vs Mukoome Agencies [1982] HCB 225; Bunjo Jonathan Vs KCB Bank of Uganda Ltd HCMA No. 174 of 2014* and *Byaruhanga Tumwesigye Vs Equity Bank (U) Ltd HCMA No.* 25 *1052 of 2016.*

Furthermore, Counsel for the Applicant submitted that the main suit reveals various issues that should be investigated and these are; whether the parties had several meetings wherein permission was granted to the 30 Applicant to make improvements on the suit property, whether the Applicant indeed made improvements on the suit property, whether the parties agreed to value and consider the improvements worth to be

5 considered as rent and whether the Applicant is indebted to the Respondent. In conclusion, Counsel for the Applicant prayed to the Court to find that there is a plausible defence and allow this application.

#### Respondent's submissions

Counsel for the Respondent first cited the case of *Children of Africa Vs* 10 *Sarick Construction Ltd HCMA No. 134 of 2016*, wherein it was stated that, there are two pre-conditions to be fulfilled that is; that the Applicant must establish that he or she has a good defence on the merits and that the Applicant must establish a triable issue of law or fact to be tried or that there is a dispute which ought to be tried.

- 15 On whether the Applicant has a good defence on the merits; Counsel submitted that under paragraph **15** of the affidavit in support, the Applicant admitted that its tenancy relationship with the Respondent expired and it elected not to renew its tenancy but requested for a discussion on quantifying the structural alterations to the tune of USD 20 73,407 made in the interest of offsetting rent of USD 71,667 or a refund. - Counsel further submitted that if USD 73,407 is offset from the USD 71,667 there would be a balance of only USD 1,740 in favour of the Applicant. That the rent arrears being demanded under paragraph **4 (d)** of the specially endorsed plaint were from 2021 to February, 2024 but given 25 the continued stay of the Applicant in the premises, it is in further arrears as it has fully utilized the alleged balance of USD 1,740. That the Applicant's only defence for staying on the Respondent's rental premises was to allegedly utilize its money spent on the structural alterations of the premises and that as elaborated above, the Applicant has since utilized all 30 its money as claimed and is now a trespasser liable to be evicted and is also in arrears.

- 5 On whether there is a bonafide triable issue of law or fact to be tried or whether there is a dispute which ought to be tried; Counsel submitted that according to the Applicant, the triable issue relates to the fact that it made structural alterations to the premises and agreed with the Respondent to offset the same which was denied hence creating a semblance of a dispute - 10 to be tried. That however, there are a lot of loopholes in the said dispute. Counsel contended that the Applicant disputed being indebted to the Respondent by adducing receipts marked as "**C1-C3"** dated 2019 which was shortly after the execution of the Tenancy Agreement yet it was not the Applicant's obligation to maintain the exterior and substantial repairs - 15 of the rental premises. Further that, **Sections 91 and 92 of the Evidence Act** provide that if the terms of a contract have been reduced into writing, no evidence may be adduced in respect thereof as it would be deemed to vary or otherwise alter the term of such an agreement and thus it would offend the law if the Court was to accept such a defence yet it was not 20 stated anywhere in the Agreement that the repairs or improvements made by any party would be claimed against the other.

Furthermore, Counsel for the Respondent contended that the structural improvements claimed were for the benefit of the Applicant for close to six years and the same have since depreciated and more so, under the Income

- 25 Tax Act, all the structural improvements/repairs claimed to have been made by the Applicant are regarded as deductions and benefits to the Applicant and not the Respondent. That also, the chattels/tools of business are not needed by the Respondent and therefore the Court should order the same to be taken away by the Applicant. - 30 In conclusion, Counsel for the Respondent submitted that the receipts and invoices adduced by the Applicant marked as "**C1-C3"** and "**D"** show that

- 5 the Applicant spent UGX 101,929,260/=. That the amount sought under the specially endorsed plaint is USD 71,667 which if converted into Uganda Shillings would amount to UGX 278,497,962/= which if offset, the Respondent would still demand for UGX 176,568,702/= as rental arrears. Counsel consequently prayed that if the Court is inclined to consider the - 10 structural improvements, it can offset the amount proved to have been spent and order the Applicant to pay the outstanding sum of UGX 176,568,702= as well as the rental arrears since March, 2024 up to the date of the Ruling being the time this matter has been in the Court.

#### Analysis and Determination

15 I have duly considered the submissions of both Counsel, as well as the evidence of both parties.

**Order 36 rule 3(1) of the Civil Procedure Rules**, stipulates that a Defendant served with the summons, issued upon the filing of a specially endorsed plaint and an affidavit under **rule 2** of this Order, shall not 20 appear and defend the suit except upon applying for, and obtaining leave from Court.

As was held in the case of *Maluku Interglobal Trade Agency Ltd Vs Bank of Uganda (***supra***),* for leave to appear and defend a summary suit to be granted, an Applicant must show by affidavit or otherwise that there 25 is a bona fide triable issue of fact or law. Furthermore, in the case of *Jamil Ssenyonjo Vs Jonathan Bunjo, H. C. Civil Suit No. 180 of 2012,* it was stated that a triable issue is one that only arises when a material proposition of law or fact is affirmed by one party and denied by the other. It is, hence, capable of being resolved through a legal trial that is, a matter 30 that is subject or liable to judicial examination in Court. Therefore, a defence raised by the Applicant should not be averred in a manner that

- 5 appears to be needlessly bald, vague or sketchy. A triable issue must be differentiated from a mere denial. The defence raised must also not be a sham intended to delay the Plaintiff from recovering his/her money. If the defence is based upon facts, in the sense that material facts alleged by the Plaintiff in the plaint are disputed or new facts are alleged constituting a - 10 defence, the Court does not attempt to decide these issues or to determine whether or not there is a balance of probabilities in favour of one party or the other.

Further, in the case of *Kotecha Vs Adam Mohammed [2002]1 EA 112*, it was held that where a suit is brought under summary procedure on a

15 specially endorsed plaint, the Defendant shall be granted leave to appear and defend if he/she can show that he/she has a good defence on merit, or that a difficult point of law is involved, or a dispute as to the facts which ought to be tried; or a real dispute as to the amount claimed which requires taking an account to determine; or any other circumstances showing 20 reasonable grounds of a bonafide defence.

In addition, in the case of *Maluku Interglobal Trade Agency Ltd Vs Bank of Uganda* **(supra***)*, the Court noted that in such a case:

"*The Defendant is not bound to show a good defence on the merits but should satisfy the Court that there was an issue or question in dispute* 25 *which ought to be tried and the Court shall not enter upon the trial of issues disclosed at this stage."*

In the matter at hand, the Applicant disputes its indebtedness to the Respondent contending that it made structural improvements to the suit premises with the consent of the Respondent all amounting to USD 30 73,407. That the Applicant and the Respondent further agreed that the amount so spent would be offset and therefore; it is not indebted to the - 5 Respondent to the tune of USD 71,667 as claimed in the specially endorsed plaint. On the other hand, the Respondent disputes the claim that there was an agreement between her and the Applicant in respect of the structural alterations and further contends that under their Tenancy Agreement, there was no provision to the effect that the Applicant was - 10 responsible for any improvements or repairs of the suit premises nor was there any provision on the aspect of offsetting amounts from the rent due in case of any expenses incurred by either party.

I have perused the Tenancy Agreement annexed to the Applicant's affidavit marked as annexure **"A"**. **Clause 3** of the Tenancy Agreement provides 15 that:

## *"3. Landlord's rights*

*The tenant hereby grants full right and liberty for the landlord and her agents or workmen at all reasonable times upon serving of reasonable notice and with the presence of the tenant or her agent to enter into* 20 *and upon the demised premises and all parts thereof for the purposes of repairing, maintaining, altering, cleansing, examining or testing the building and all parts thereof including sewages, drains, channels, pipes, wires and cables serving the same and to make all connections which may be necessary in relation thereof and for the purpose of* 25 *carrying out any work or doing anything whatsoever comprised within the landlord's obligations hereinafter contained*." **[My Emphasis]**

Under paragraph **15**, of the affidavit in support of the application, the Applicant averred that after several meetings, between it and the Respondent, it was permitted to modify the property to adapt the suit 30 premises to its needs. To this, the Respondent under paragraphs **4 and 5** of her affidavit in reply contends that she has never received any request

- 5 or communication nor has she ever approved any request for improvements of the suit premises. The Applicant never rebutted this claim nor did it attach any evidence to prove the occurrence of the said meeting or any form of evidence showing the points of agreement arising from the meeting being referred to. - 10 In addition, under **clause 3** of the Tenancy Agreement, it is undisputed that it was the sole duty of the landlord to repair, maintain and alter all parts of the demised premises. In the absence of any evidence to the contrary, the Respondent cannot be deemed liable for any alterations made on the suit premises for the Applicant's benefit in its business 15 operations without her consent. In my considered view, any alleged amendment to a material clause in a Tenancy Agreement, such as rent must be supported by evidence and not mere assertions by either party.

The Applicant further averred under paragraphs **14, 15, 16 and 17** of its affidavit that the Respondent agreed to offset the amount spent on 20 improving the suit premises but it continued paying its full rental sum until 24th May, 2021 when it elected not to renew its tenancy. That it then requested for a discussion on quantifying the structural alterations in the interest of offsetting rent or refunding the same and the request was approved by the Respondent and, to that, it elected to use the said credit 25 as rent for a further period. This claim was disputed by the Respondent who alleged that she has never received any request or had any meeting sessions with the Applicant and that there is no agreement relating to any offset. The Applicant did not adduce any evidence that the meeting took place in form of minutes or any recording to convince Court that it has a 30 good defence to the claims by the Respondent; particularly in relation to the issue of offset of the amounts incurred in the structural modifications.

## 5 Further, **Clause 5(i) of the Tenancy Agreement** marked as **"A"** stipulates that:

*"The tenant hereby covenants with the landlord as follows:*-

*(i) To pay during the said term the said rent at the time and in the manner herein provided without any deduction unless so agreed* 10 *to by both parties in writing as an addendum to this agreement."*

## **[My Emphasis]**

The above clause is to the effect that the Applicant was to pay the agreed rent with no deductions unless so agreed by both parties in writing as an addendum to the Agreement. The above clause is very clear and straight 15 forward. The Applicant did not avail any addendum to show that indeed there was an agreement to effect any offset to the rent payable as required by **clause 5(i)** of the Tenancy Agreement reproduced hereinabove.

I also noted that the structural modifications to the premises were largely for the convenience of the Applicant and it is not clear why the issue of 20 offset was never reduced into writing in form of an addendum to provide for the treatment of the high costs that the Applicant as a tenant was incurring on the modifications of the premises; if indeed the Respondent had agreed to an offset. The Tenancy Agreement between the parties which is the basis of the relationship between the parties clearly provided that in 25 case of any deductions from rent, the parties would execute an addendum.

Court has not been provided with any form of evidence to that effect.

It is trite that extrinsic evidence cannot be used to vary the terms of a written contract. Therefore, in the absence of any addendum or any form of evidence as to the rent deductions, this Court is not satisfied that the

5 parties agreed to offset the amount claimed to have been spent on the structural alterations.

Furthermore, the Applicant attached a notice of termination of the Tenancy Agreement dated 24th May, 2021. The Applicant in the aforementioned letter was requesting for a meeting to discuss the 10 transition and handover process putting into consideration the structural changes on the captioned property that was made. There is no reference in the aforementioned letter to any offset of the amounts spent on the structural alterations from the rent.

As already stated above, there is no evidence of any meeting between the 15 parties where possibly the issue of offset could have been discussed and therefore this does not amount to a plausible defence to warrant the granting of leave to appear and defend. It would only be denying the Respondent her due entitlements in terms of rent and possession of her premises and this would not be just in my view to the Respondent as the 20 owner of the premises.

In my considered view, the Applicant has not raised any triable issues of fact or law to warrant the granting of leave to appear and defend the suit.

As was held in the case of *Twentsche Overseas Trading Co. Ltd Vs Bombay Garage [1958] EA 741,* summary procedure is only resorted to 25 in clear and straightforward cases where the demand is liquidated and there are no issues for determination by the Court except for the grant of the claim.

Without prejudice to his earlier submissions, Counsel for the Respondent 30 suggested and prayed that in case this Court is inclined to take into consideration the improvements claimed by the Applicant on the rental

- 5 premises, it can offset the Respondent's amounts claimed and order it to pay the outstanding amount of UGX 176,568,702/=, rental arrears since March, 2024 up to date. This was however not contained in the affidavit evidence of the Respondent nor was this prayer made in the suit. - Nevertheless, the Applicant did not make a rejoinder to the above 10 submission and as averred under paragraphs **18 and 19** of the affidavit in support, the contention for leave to appear and defend the suit in issue is that the Applicant made structural alterations to the Respondent's premises amounting to USD 73,407. - As analyzed above, no evidence was presented to show that the 15 Respondent consented to the alterations claimed to raise a triable issue to permit an offset from the suit amount and thus no evident defence has been presented to Court. The Applicant did not adduce any form of evidence relating to the alleged consent for offsetting the amounts and yet the Tenancy Agreement was very clear on how to deal with such changes 20 if any, that is in the form of executing an addendum to vary the terms - agreed upon.

In addition, the nature of the improvements made were for the benefit of the Applicant in its business and therefore it begs the question as to why the parties did not sign an addendum to address the same if indeed there 25 was an agreement on how costs of the modifications should be treated? It should be noted that the parties had executed a legal document that was governing their relationship stipulating the rent payable, mode of payment and rights and obligations of each party and therefore if there was any change to the agreed terms, the same should have been clearly stipulated 30 in a document signed by both parties.

- 5 In the case of *Omega Bank Plc Vs O. B. C Limited [2005] 8 NWLR (Pt. 1294) 511 at 536,* it was held that it is not the function of the Court to make contracts between the parties, but it is the Court's duty to construe the surrounding circumstances, including written and oral statements, to effectuate the intention of the parties. - 10 I have also considered the basis for summary procedure as summarized by the Supreme Court in the case of *Post Bank (U) Ltd Vs Abdul Ssozi SCCA No.8 of 2015* when it held that:

"*Order 36 was enacted to facilitate the expeditious disposal of cases involving debts and contracts of a commercial nature to* 15 *prevent Defendants from presenting frivolous or vexatious defences in order to unreasonably prolong litigation*."

Since it is not disputed that the Tenancy Agreement expired on 30th May, 2021, and the Applicant has been in occupation of the same without any right, I do not find any triable issue raised by the Applicant for the trial of

- 20 the suit. The Applicant has not adduced any evidence demonstrating that it has a good defence to the claim of the Respondent for payment of rental arrears. It is only fair and just for the Applicant to settle the outstanding rental arrears and vacate the premises. Accordingly, I decline to grant the application. - 25 Issue No. 1 is therefore resolved in the negative.

## Issue No.2: What remedies are available to the parties?

This Court having found issue No. 1 above in the negative, further finds that this application for leave to appear and defend is devoid of merit.

30 It is settled law that summary procedure provides a quick way for the Plaintiff who demands a liquidated sum to obtain judgment where there is

5 no evident defence. (See: *Post Bank (U) Limited Vs Abdul Ssozi* **(supra),** and *Ndibazza Naima Vs Acacia Finance Limited HCMA No. 1144 of 2014).*

Accordingly, this application is dismissed, and the Respondent/Plaintiff is entitled to a Decree under **Order 36 rule 5 of the Civil Procedure Rules**

10 **SI 71-1.**

The Respondent also prayed for recovery of her premises. **Section 44 of the Landlord and Tenant Act, Cap. 238** provides for vacation of premises on termination of a tenancy. In the circumstances, and since the Applicant

- 15 has not vacated the premises, I hereby order that the Applicant gives vacant possession of the premises to the Respondent to enable the Respondent utilize her premises in which ever manner she deems fit. It is unfair and unjust for the Applicant to continue staying in the Respondent's premises and still refuse to pay the rent due or even vacate - 20 the premises. The Applicant shall take all its chattels/ tools of business when vacating the premises. In my view, the Respondent should not take benefit of the same.

On the issue of interest, the Respondent/Plaintiff in the summary suit 25 prayed for interest on the outstanding sum at the rate of 5% per month from March, 2021 until payment in full.

**Section 26(1) of the Civil Procedure Act, Cap. 282** is to the effect that the Court can award interest that is just and reasonable. As was held in

30 the case of *Milly Masembe Vs Sugar Corporation (U) Ltd and Another SCCA No. 1 of 2000* the guiding principle is that interest is awarded at the discretion of the Court but the Court should exercise the discretion judiciously taking into account all the circumstances of the case.

- 5 In the instant case, the Respondent did not provide any justification for the prayer for interest. I have also noted that the parties did not agree to the interest claimed by the Respondent in the suit and accordingly given the facts of this case, I decline to grant the same. - 10 Regarding costs, the Applicant sought for the costs of the application. **Section 27(2) of the Civil Procedure Act** provides that costs of any cause follow the event unless otherwise ordered by the Court. In the case of *Uganda Development Bank Vs Muganga Construction Co. Ltd [1981] H. C. B 35,* **Hon. Justice Manyindo** (as he then was) held that: - 15 "*A successful party can only be denied costs if it is proved, that but for his or her conduct, the action would not have been brought, the costs will follow the event where the party succeeds in the main purpose of the suit."*

The Respondent/Plaintiff being the successful party in this case is 20 therefore entitled to the costs of this application.

Accordingly, Judgment is hereby entered for the Respondent/Plaintiff against the Applicant/Defendant in the following terms:

- 1. The Respondent/Plaintiff is entitled to a sum of USD 71,667 (United States Dollars Seventy-One Thousand Six Hundred Sixty-Seven 25 Only) in Civil Suit No. 330 of 2024. - 2. The Applicant/Defendant is hereby directed to give vacant possession of the suit premises to the Respondent/Plaintiff, not later than ten (10) days from the date of this Ruling, failing which eviction 30 shall issue. - 3. The Applicant/Defendant shall take all its chattels/ tools of business when vacating the premises.

5 4. The Respondent/Plaintiff is awarded the costs of this application and the suit.

It is so ordered.

Dated, signed and delivered electronically this **10th** day of **July, 2024.**

Patience T. E. Rubagumya **JUDGE** 10/07/2024 8:30am

15