Ntende v Stanbic Bank Uganda Limited (Miscellaneous Application 1447 of 2024) [2024] UGHCLD 261 (7 November 2024)

Full Case Text

#### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA **LAND DIVISION**

## **MISCELLANEOUS APPLICATION NO. 1447 OF 2024**

#### (ARISING FROM CIVIL SUIT NO. 116 OF 2024)

# NTENDE REBECCA :::::::::::::::::::::::::::::::::::

#### **VERSUS**

# STANBIC BANK UGANDA LIMITED ::::::::::::::::::::::::::::::::::::

### **RULING**

#### BEFORE: HON. LADY JUSTICE NABAKOOZA FLAVIA. K

This application is brought by notice of motion under Section 98 of the Civil Procedure Act, Order 8 Rule 2, 8, 9 & 11 (2), Order 52 r 1, 2 of the Civil Procedure Rules for orders that; -

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a. The Respondent's counter-claim is barred by law, amounts to an abuse of court process and be struck out.

b. The costs of the application be provided for.

The grounds of this application are supported by the Applicant's affidavit. They are, briefly; that the Applicant instituted Civil Suit No. 116 of 2024 on the 6th day of February 2024 against the Respondent and Ntende George for illegal mortgaging of the suit land without her consent as a spouse. That on $2/04/2024$ , the Respondent filed its amended written statement of defence wherein it counter claimed against the 1st Defendant for breach of contract and recovery of 1,370,000,000/- (One Billion Three Hundred and Seventy Million Shillings); that the 1st Defendant does not have any claim against any party before this court and that his claim cannot be sustained against a co-defendant. That the Respondent ought to have instituted an independent suit against the 1st Defendant other than a counter-claim.

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The Application was opposed by Respondent through an affidavit in reply deponed by Mr. Mutahunga Morris (a Senior Legal Officer in the Respondent's **Recoveries and Rehabilitation Department).** He deponed that the suit property was lawfully mortgaged by the 1st Defendant in the main suit and that he is still indebted to the Respondent Bank to a sum of 1,370,000,000/- by virtue of an

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executed mortgage deed. That the said Defendant filed a defence on 20/03/2024 wherein he faulted the process leading to the mortgage and challenged the Respondent Bank's interest despite utilizing the Respondent's monies under several loan facility agreements. That the Respondent can legally maintain an action against Mr. Ntende George to recover the outstanding sum and that the mode adopted by the Respondent is not a lien to the practice in the courts of law. That the counterclaim is properly before court because the events leading to it arise from the same set of facts, same subject matter and that the findings of this court in the counterclaim shall affect the same parties' rights and interests. That the counterclaim is only intended to have all questions regarding the parties' rights and interest in the suit property conclusively determined and avoid multiplicity of suits.

**Legal representation**; the Applicant was represented by Counsel Mugerwa Marcos while Counsel Senkungu Simon Peter represented the Respondent. Both counsel filed written submissions which I have considered.

Counsel for the Applicant raised only one issue for resolution, to wit; -40

> a. Whether the 2nd Defendant/Respondent can set up a counterclaim against Ntende George (1st Defendant) solely?

Counsel for the Respondent also raised a preliminary objection to the effect that the Applicant lacks the requisite locus standi to institute the instant application. Therefore, the issues for resolution shall be as follows; -

i. Whether the Applicant has locus standi to institute the application?

ii. Whether the Respondent's counter-claim can be maintained?

#### Resolutions. Issue 1. Whether the Applicant has locus standi to institute the 50 application?

Counsel for the Respondent relied on the cases of DFCU Bank Ltd & 3 Ors Vs MP Electronics Ltd & Anor HCMA No. 124 of 2024 and JS Vs Secretary of State [2002] EWHC 234 Admin and argued that the Applicant as a non-party to the Respondent's counter-claim and/ or cross- action and as a person whose rights are not in any way prejudiced by the Respondent's suits lacks the requisite locus standi to bring the instant application seeking to challenge any of the Respondent's counter-claim and prayers therein. He argued that locus standi is predicated on a person having a direct or sufficient interest when he/she has suffered a legal grievance or is a person against whom when the decision is pronounced, will be

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deprived of something or denied something. In further support thereof, he cited Christopher Mutiembu Machimbo & 3 Ors vs The County Surveyor, Trans-Nzoia & 4 Ors (2022) eKLR where the court in Kenya observed that 'without locus standi, even a party with a meritious case, cannot be heard because of that. Locus standi is so important that in its absence, a party has no basis to claim anything before the court'.

In reply, Counsel for the Applicant submitted that the Applicant on $6/02/2024$ filed the main suit against the Respondent and Ntende George for illegally mortgaging the suit land without her consent as a spouse. That the Respondent on filing an amended written statement of defence set up a counterclaim solely against Ntende George focusing on his transactions with Geomax Engineering Ltd, Nabaya Solver & Kaliba Fredrick Ruhwenza where the Applicant was not a party. That since the Respondent did not seek spousal consent, they waived their right to claim that the rights of the parties will be disposed of in the main suit. That the current application is right before this court since it is based on a question of law as to whether a defendant can counter-claim solely against a co-defendant without having any claim against the Plaintiff. That the application should be determined on its merits and the main suit be fixed for hearing.

In rejoinder, Counsel for the Respondent relied on Section 98 of the Civil Procedure Act and Order 8 rules 2 and 8 of the Civil Procedure Rules and contended that only parties to a counter-claim can challenge its regularity and not otherwise. That the proper person to lodge such application would have been Mr. Ntende George (Counter-Defendant).

#### **Resolution of the Issue**

In Emmanuel Lukwajju Vs Kyaggwe Coffee Curing Estates Ltd & Anor Sup-CV-CA No. 2 of 2016, the Supreme Court observed that "having a legal standing in civil matters or case, means that a person who has sued another has a cause of action...an inquiry into the existence of locus is therefore a question of law...." (see. Pages 34 -35 of the Judgement). In Dima Enterprises Poro vs. Inyani Godfrey HCCA No.17 of 2016, it was observed by my brother Mubiru J. that "the requirement of sufficient interest in the subject matter of litigation is the determinant of the existence or otherwise of locus

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# stand..." and that "in determining such a point (locus standi), the court is perfectly entitled to look at the pleadings and other relevant matter in its records."

Under Paragraph 3 (c) of the counter-claim, the Respondent, among other reliefs, prayed in the alternative for an order for sale of the mortgage properties comprised 100 in Kyadondo Block 222 Plot 1830 land at Namugongo registered in the names of George Ntende.

Contrary to the Respondent's assertions, the Applicant claims that the Respondent and George Ntende illegally mortgaged the suit land without her consent as a spouse 105 (see. Paragraph 2 of the affidavit in support). This alone gives the Applicant sufficient interest in the subject matter of litigation; and therefore locus standi.

I have at Order 8 rule 2(1) and 8 of the Civil Procedure Rules. However, I found the same irrelevant to the determination of locus standi as the Respondent's Counsel 110 argued. The said provisions are only relevant the determination of the second issue, as it shall be demonstrated. Accordingly, the first issue is resolved in the affirmative.

### Issue 2. Whether the Respondent's counter-claim can be maintained.

Counsel for the Applicant relied on Order 8 rule 8 of the Civil Procedure Rules and argued that the rules do not have room for a counter-claim against a co-defendant only. That a counter-claim must be against the Plaintiff first, before any other person can be added. He relied on the case of Stanbic Bank Vs. Victoria Fishnet Supplies Ltd & Ors MA No. 294/2015 and Order 8 rules 2, 8 and 11 (2) of the Civil Procedure Rules and argued that the plaintiff shall always be a party to the counter-claim; and that if the Respondent intended to proceed against the codefendant alone, it should have filed an independent suit.

In reply, Counsel for the Respondent submitted that the Respondent's counterclaim is properly brought before court as it is intended to resolve all material questions regarding the parties' rights and interest in the mortgaged suit property and avoid conflicting judgments. That order 8 rule 8 of the C. P. R is merely directory on the format of the Defendant's pleadings. That the Respondent's counter-claim falls within the parameters of Order 8 rule 12 of the C. P. R, which allows for the addition of any other party and that the questions fronted by the Respondent in the counterclaim are those that can conveniently be disposed of by way of a counter-claim as

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opposed to filing a separate suit. Counsel also relied on the case of Otto Justine Vs Tabu Richard & 7 Ors HCCS No. 23 of 2015 and Mohan Musisi Kiwanuka Vs Asha Chand SCCA No. $14/2002$ to submit that a counter-claim is a cross action and that courts must as much as possible avoid multiplicity of suits. He also cited Marriam-Webster Online Dictionary which defines a cross-action as an action brought by a defendant in an existing action against the Plaintiff or co-defendant.

In rejoinder, the Applicant's Counsel submitted that the Respondent cannot claim that the dismissal of this application will cause multiplicity of suits, because they have already instituted a suit against Geomax Engineering Limited & Nabaya Silver in High Court, Commercial Division seeking determination of rights of parties in regards to the same transaction. That the Respondent should sue Ntende George in 145 a separate suit or rather add him as a party in the suit before Commercial Division unless they are sure that he was not a guarantor to the loan but only used his certificate of title for attaching value to the loan obtained by Geomax Engineering Limited. He added that the relevant provisions of the law in this matter are Rules 2 and 8 of Order 8 of The Civil Procedure Rules which should be given a plain 150 meaning. That these provisions should be given their plain meaning. That under rule 2, the counter claim arises out of an action brought by the Plaintiff when the defendant sets up a cross action to enable the court enter judgment in that same suit. He cited the case of Stanbic Bank Vs. Victoria Fishnet Supplies Ltd & others M. A. 294/2015 and Rule 11 (2) of Order 8 of the Civil Procedure for his 155 argument that a Plaintiff must always be a party to the Counter Claim.

# **Resolution of the Issue**

Order 8 rule 2 of the Civil Procedure Rules gives qualifications of a counter-claim as a cross action against the Plaintiff and others. From the wording of this provision 160 still, the effect of a counter claim is to challenge the Plaintiff's claim. In other words, the Defendant under a counter claim will merely be stating that he/she has a better claim to the subject matter of litigation than the Plaintiff, hence a cross action.

Thus, in Suuta Proscovia Vs Mugabane David & Anor HCCA No. 123 of 2016 165 my learned brother Elubu J held that the counter claim only arises as in the case in the Civil Procedure Rules against the claim of another party, in this case being the Plaintiff. Additionally, in Omumbejja Namusisi & Ors Vs Makerere University (Miscellaneous Application No. 1199 of 2013) my Learned brother Bashaija J pointed out that, Order 8 r.2 (1) CPR allows a defendant to set up a 170

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counterclaim against claims of the plaintiff, and the counterclaim shall have the same effect as a cross-action'.

Premised on the above, I find the argument by the Respondent's Counsel that the counter-claim falls within the parameters of Order 8 rule 12 CPR, which allows for 175 the addition of any other party, to be misconceived, with due respect. The plain meaning of the provisions of the said law is that a Defendant/counterclaimant has a right to apply to court to have the counter-claim separated from his defence or have it dismissed. They do not provide for the filing of a counter-claim against a party other than the Plaintiff. 180

I take note of the cases relied on by the Respondent's Counsel to wit; - Kabuito Contractors Ltd Vs Mereka & Co. Advocates (Court of Appeal of Kenya CA No. 240 of 2001), and Christopher Mutiembu Machimbo & 3 Ors Vs The County Surveyor, Trans-Nzoia ELC Case No. 52 of 2021 (Kenya). However, the same are merely persuasive and inapplicable as far as the cited Civil Procedure Rules are concerned. In the premises, a counter-claim, in this case, cannot stand. Consequently, I resolve the second issue in the negative.

In conclusion, the application is granted as prayed with costs to the applicant. 190 Signed, dated and delivered at KAMPALA this ...... day of November 2024.

Nabakooza Flavia. K