Namusiitwa v Gasline Petroleum Energy (U) Limited (Miscellaneous Application 544 of 2024) [2024] UGCommC 249 (5 July 2024)

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISCELLANEOUS APPLICATION NO. 544 OF 2024 (ARISING OUT OF CIVIL SUIT NO. 253 OF 2024)** 10 **NAMUSIITWA HADIJA ::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT VERSUS GASLINE PETROLEUM ENERGY (U) LTD ::::::::::::::::::::::: RESPONDENT BEFORE: HON. LADY JUSTICE PATIENCE T. E. RUBAGUMYA RULING**

## 15 Introduction

This application was brought by way of Notice of Motion under **Section 98 of the Civil Procedure Act**, **Order 36 rules 3 and 4** and **Order 52 rules 1, 2 and 3 of the Civil Procedure Rules SI No.71-1**, seeking orders that:

1. The Applicant be granted unconditional leave to appear and defend 20 Civil Suit No. 253 of 2024.

2. Costs of the application be provided for.

### Background

The background of this application is contained in the affidavit in support of the application deponed by the Applicant and is summarized below:

25 1. That on 4th August, 2020 the Applicant while trading as Haki Oils, entered into an oral fuel supply understanding with a company called Masaf Petroleum led by a one Hajji Hadad Damba Sebalu who

- 5 disclosed to the Applicant that he gets the fuel supplies for distribution from the Respondent. - 2. That the Respondent does not have a valid contract directly with the Applicant as is claimed in the main suit. - 3. That all the fuel supplies made by Masaf Petroleum to the Applicant were fully paid for in cash, phone deposits and bank deposits via Stanbic Bank and Centenary Bank to zero balance. - 4. That she was shocked to learn that Masaf Petroleum or Hajji Hadad Damba Sebalu who was fully paid for the supplies made, never paid the Respondent. - 5. That an internal verification of the Respondent's claim was made and it was discovered that the Respondent did not have any pro forma delivery notes or supply supporting documents to show that it traded directly with the Applicant nor was there anything to establish that 25 the Applicant was indebted to Masaf Petroleum or Hajji Hadad Damba Sebalu to the tune of UGX 126,802,906/=. - 6. That on 22nd January, 2024 a conflict arose between the Respondent and Masaf Petroleum over the unpaid balance and that, the 30 Applicant was contacted by the Respondent's sales and marketing Manager Mr. Mahad Sekitto inquiring about the unpaid balance to which the Applicant explained that she did not owe their agent any monies for the supplies. - 35

7. That the Respondent's sales and marketing Manager went ahead to open a criminal case against the Applicant and that after commencing the said case, the Respondent's lawyer Mr. Henry Agaba tricked the Applicant into signing a credit facility dated 22nd

5 November, 2023 wherein it was stated that the Applicant was to be given fuel on credit worth UGX 150,000,000/=.

8. That the Applicant signed the said Credit Facility without the Respondent's sales and marketing Manager first reading or 10 interpreting the terms to her, which clearly indicates fraud.

9. That the Respondent's sales and marketing Manager also proposed to take the Applicant to the Commissioner Land Registration to help 15 her remove a caveat on her title after which he withheld it against her wish to date.

In reply, the Respondent through Mr. Mahad Sekitto its sales and marketing Manager, opposed the application contending that:

- 1. The Respondent has on several occasions supplied fuel products to 20 the Applicant in cash and on credit at her petrol station known as Haki Service Station and the same have always been paid for by the Applicant personally upon sale and/or on demand. - 2. The Respondent mainly supplied the fuel to the Applicant which was 25 occasionally collected by the Applicant's agent Hajji Hadad Damba Sebalu in the trade name of Haki Oils and sometimes in the trade name of Masaf Petroleum but at all times, the said fuel was paid for by the Applicant. - 3. The Respondent received the said payments on its bank accounts in Stanbic Bank and Centenary Bank and the said payments were deposited by different employees/agents of the Applicant but largely - 35

by the Applicant herself through agency banking.

- 5 4. The Respondent never contracted Hajji Hadad Damba Sebalu as its agent but on the contrary, the Applicant represented Haki Oils and Masaf Petroleum as one and the same and all invoices issued by the Respondent in respect of both Masaf and Haki Oils were paid for by the Applicant. 10 - 5. Whereas the Applicant denies any contractual relationship with the Respondent, she admits that the money given to the said Hajji Hadad was meant to be delivered to the Respondent which impliedly 15 indicates existence of a contractual relationship between the Applicant and the Respondent. - 6. The Applicant denies having a contractual relationship with the Respondent but she attached credit statements and customer 20 transaction sheets issued by the Respondent to Masaf Petroleum and Haki Oils in respect of the fuel supplies all of which were paid by the Applicant. - 25 7. The Applicant acknowledged her indebtedness to the Respondent in the said sums through a Trade Credit offer letter that was executed on 22nd November, 2023 and even pledged her certificate of title for land comprised in Kyadondo Block 265 Plot 10139 land at Bunamwaya measuring approximately 0.1010 hectares as collateral 30 security for the said debt and a further Credit Facility. - 8. The Respondent's sales and marketing Manager contacted the Applicant when she refused to pay the outstanding debt alleging that she had given the said sums to her agent Hajji Hadad for onward 35 delivery to the Respondent yet the said agent did not pay the same to the Respondent.

5 9. The Respondent's sales and marketing Manager has at all times communicated with the Applicant in both English and Luganda.

In rejoinder, the Applicant further contended that:

1. The said oral Contract which she executed on 4th August, 2020 was entered with a company known as Masaf Petroleum led by Hajji 10 Hadad Damba Sebalu, a supplier or agent of the Respondent.

2. The alleged offer letter should be declared illegal since it was never executed between the Respondent and the Applicant which makes it non-existent and that it does not bear any company seal nor was it 15 put on the said company's headed paper and that no company resolution was availed to Court concerning or approving the claim purportedly contained in the offer letter tendered to Court.

3. The Respondent has not availed any supply Contract or any supply 20 documents to prove its purported contractual relationship with the Applicant.

4. The intended Civil Suit No. 253 of 2024 has serious triable issues 25 including her claim that she fully paid all the monies for the fuel she drew from the Respondent's supplier or agent – Masaf/Hadad which issues need to be investigated and further that she has a valid defence to the Suit.

#### Representation

30 The Applicant was represented by **M/s Ayebazibwe-Makorogo & Co. Advocates** while the Respondent was represented by **M/s Meritas Advocates.**

5 The parties were directed to file their written submissions but only the Applicant complied and her submissions have been considered by Court.

#### Issues for Determination

In accordance with **Order 15 rule 5 (1) of the Civil Procedure Rules,** this Court has rephrased the issues so raised to read as follows:

- 10 1. Whether the Applicant has raised sufficient grounds to warrant the grant of unconditional leave to appear and defend Civil Suit No. 253 of 2024? - 2. What remedies are available to the parties?

# Issue No.1: Whether the Applicant has raised sufficient grounds to warrant 15 the grant of unconditional leave to appear and defend Civil Suit No. 253 of 2024?

#### Applicant's submissions

Counsel for the Applicant submitted that the law governing applications for leave to appear and defend is that the Applicant must show by affidavit 20 or otherwise that there is a bonafide triable issue of law or fact and that any defence raised should be stated with sufficient particulars so as to appear genuine and not generally vague as per the cases of *Maluku Interglobal Trade Agency Vs Bank of Uganda [1985] HCB 65* and *Tororo District Administration Vs Andabalap Industries [1997] IV* 25 *KALR 126.*

Counsel also relied on the case of *Abubakar Kato Kasule Vs Tomson Muhwezi [1992-1993] HCB 212* where Court held that: 5 *"In all applications for leave to appear and defend, the Court must study the grounds raised and ascertain whether they raised a real issue and not a sham one i.e. the Court must be certain that if the facts alleged by the Applicant/Defendant were established there would be a plausible defence; if the Applicant/Defendant has a plausible* 10 *defence he/she should be allowed to defend the suit unconditionally."*

Relating the above to the instant case, Counsel for the Applicant submitted that it is clear from the plaint and annexures that the Respondent never executed the purported agreement with the Applicant for supplying her with fuel as the said fuel was never supplied as alleged. That the purported 15 transaction was also crafted without the required board resolution of the Respondent and that the agreement does not bear the company seal to confirm its authenticity but rather it is on an advocate's headed paper.

Counsel further submitted that the fact that the Applicant never contracted the Respondent but rather with the Respondent's agent a one

20 Masaf/Hadad Damba Sebalu, who is not a party to this suit is a serious triable issue that warrants Court to grant leave to the Applicant so that she can defend this matter.

In conclusion, Counsel for the Applicant prayed to Court to grant leave to the Applicant so that she can appear and defend the main suit as she has 25 an arguable defence as evidenced by the intended written statement of defence and counterclaim.

## Analysis and Determination

**Order 36 rule 3 (1) of the Civil Procedure Rules**, stipulates that a Defendant served with summons, issued upon the filing of a specially 30 endorsed plaint and an affidavit under rule 2 of this Order, shall not

5 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 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 is a 10 bona fide triable issue of fact or law.

Further, in the case of *Jamil Ssenyonjo Vs Jonathan Bunjo HCCS No. 180 of 2012,* 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

- 15 that is subject or liable to judicial examination in Court. Therefore, a defence so raised by the Applicant should not be averred in a manner that 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 - 20 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 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 the one party or the other. - 25 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 specially endorsed plaint, the Defendant shall be granted leave to appear if he/she is able to 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; 30 or a real dispute as to the amount claimed which requires taking an

5 account to determine; or any other circumstances showing reasonable grounds of a bonafide defence.

Furthermore, in the case of *Maluku Interglobal Trade Agency 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* 10 *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."*

In the matter at hand, the Applicant disputes being indebted to the Respondent on grounds that she fully paid for all the fuel supplies that 15 she received from the Respondent's agent, Hajji Hadad Damba Sebalu, whom she was dealing with. To confirm the above assertion, she attached annexure **"A"**; two customer balance details and the account statement from the Respondent, receipts and handwritten notes showing various payments from 2021.

20 Perusal of the first customer balance detail dated 30th May, 2023 of all the transactions of Masaf/Haki Petroleum shows that on 13th May, 2023, the total debit, credit and balance was UGX 19,671,083,260/=, UGX 19,527,094,254/= and UGX 143,989,006/= respectively. The second customer balance detail issued by the Respondent of all the transactions 25 of Masafi/Haki Petroleum dated 14th July, 2023 also marked as annexure **"A"** shows that as at 13th May, 2023 the debit was UGX 19,671,083,260/=, the credit was UGX 19,534,919,354/= and the balance was UGX 136,163, 906/=. Both documents were not contested by the Respondent which means that there is a discrepancy on how much money 30 is actually due and owing, if any since according to the specially endorsed plaint, the Respondent seeks to recover UGX 126,802,906/=. This raises

- 5 a triable issue of fact as to the exact amount due and owing if any; by the Applicant. As per the case of *Kotecha Vs Adam Mohammed (***supra***)* a real dispute as to the amount claimed which requires taking an account to determine is a triable issue. - Further, under paragraphs 3, 4, 6 and 8 of the affidavit in support of the 10 application, the Applicant avers that she dealt with Masaf Petroleum led by a one Hajji Hadad Damba Sebalu the Respondent's agent/distributor, who gave her the bank account numbers for depositing the payments to which she paid fully for all the supplies that were made and thus is not indebted to the Respondent. The Applicant further adduced handwritten 15 notes marked as **"A"** titled; "payments made to Hadad" and receipts also marked as **"A"** which show that the payments were being paid to the Respondent's accounts in both Stanbic and Centenary Banks. To this, the Respondent contended under paragraph 4 (e) of its affidavit in reply that it never contracted the said Hajji Hadad Damba Sebalu nor did it contract - 20 Masaf Petroleum to supply the Applicant with fuel. In my view, this raises triable issues of fact and law particularly whether there is a valid contract between the Applicant and Respondent and whether any payments were made for the fuel supplied which is a question of fact.

It is trite that if the defence is based upon facts, in the sense that material 25 facts alleged are disputed, the Court does not attempt to decide these issues at this stage.

On the other hand, the Respondent contends that the Applicant is indebted to it on the basis of the Credit Facility letter dated 22nd November, 2023 marked as **"E"** attached to the affidavit in support of the application 30 wherein the Applicant acknowledged the debt of UGX 126,802,906/= and was even requesting for more fuel on credit. To this, the Applicant averred

- 5 that the purported agreement between her and the Respondent is illegal as she was tricked into signing it and that it was also never read and interpreted to her since she does not understand English. Furthermore, the Applicant averred that the same was crafted without the required board resolution of the Respondent and that the agreement does not bear 10 the company seal to confirm its authenticity but rather it is on an advocate's headed paper which indicates fraud. It is now trite that allegations of fraud cannot be proved by way of affidavit evidence. Accordingly, this is a triable issue that warrants further investigation by Court so as to resolve the controversy. - 15 As was held in the case of *Twentsche Overseas Trading Co. Ltd Vs Bombay Garage [1958] EA 741,* summary procedure is only resorted to in clear and straightforward cases where the demand is liquidated and there are no issues for determination by the Court. However, the matter at hand, discloses issues for determination such as the allegations of fraud, - 20 the legality of the Credit Offer letter wherein the Applicant acknowledges being indebted to the Respondent and the outstanding sums; if any. A perusal of the intended counterclaim reveals that the Applicant raises issues relating to registration of a mortgage on her property which in my view is a triable issue of fact and law that requires the Court to investigate 25 the circumstances under which the mortgage was registered and whether the same should be released to the registered owner. In my considered view, this is an issue that Court cannot conclusively investigate and determine in a summary suit.

In the circumstances, the facts and evidence adduced by the Applicant 30 disclose triable issues of law and fact that ought to be determined by the

5 Court which places the plaint outside the ambit of **Order 36 of the Civil Procedure Rules.**

In the premises, issue No. 1 is answered in the affirmative.

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

The East African Court of Appeal in the case of *Churanjila & Co. Vs A. H*

10 *Adam (1) [1950] 17 EACA 92,* held that a Defendant who has a stateable and arguable defence must be allowed to state and argue it before the Court and that all the Defendant has to show is that there is a definite triable issue of fact or law.

In the premises, I find that the Applicant has raised triable issues of law 15 and fact that merit the grant of this application. Accordingly, the application is granted with the following orders:

- 1. The Applicant is hereby granted unconditional leave to appear and defend **High Court Civil Suit No. 253 of 2024**. - 2. The Applicant is ordered to file her written statement of defence 20 within fourteen (14) days from the date of this Ruling. - 3. Costs of the application shall be in the cause.

I so order.

Dated, signed and delivered electronically this **5th** day of **July, 2024.**

25 Patience T. E. Rubagumya **JUDGE** 5/07/2024