Odeng v Equity Bank Uganda Limited (Miscellaneous Application 568 of 2024) [2024] UGCommC 204 (17 July 2024)

Full Case Text

#### THE REPUBLIC OF UGANDA

## IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION)

# **MISCELLANEOUS APPLICATION NO. 0568 OF 2024** (ARISING FROM CIVIL SUIT NO. 0227 OF 2024)

# ODENG DAVID T/A ODENG DAVID VENTURES ::::::::::::::::::::::::::::::: APPLICANT

#### **VERSUS**

EQUITY BANK UGANDA LTD :::::::::::::::::::::::::::::::::::

#### (Before: Hon. Justice Patricia Mutesi)

#### **RULING**

#### **Background**

The Applicant brought this application by notice of motion under Section 33 of the Judicature Act Cap 13, Section 98 of the Civil Procedure Act Cap 71 and Order 36 Rules 3 & 4 and Order 52 Rules 1, 2 & 3 of the Civil Procedure Rules S. I. 71-1 seeking orders that:

- 1. Unconditional leave be granted to the Applicant to appear and defend Civil Suit No. 0227 of 2024. - 2. Costs of this application be provided for.

Briefly, the grounds of this application are that:

- 1. The Applicant has a good and bonafide defence on the merits of the case. - 2. The matter involves fraud to the Applicant as he did not personally enter into any contract financing facility agreement with the Respondent. - 3. The matter involves difficult questions of law that can only be resolved at the hearing of Civil Suit No. 0227 of 2024 (hereinafter "the main suit"). - 4. There is a real dispute between the parties as to the amount claimed by the Respondent which requires taking of the accounts at the hearing. - 5. It is just and fair that this application is allowed.

The application is supported by an affidavit sworn by the Applicant. Therein he stated that he initially applied for a loan facility of UGX 150,000,000 from the Respondent. That he later changed his mind and re-applied for a facility of only UGX 70,000,000. His 2nd application was accepted by the Respondent and the loan was disbursed, though without an offer letter being issued and endorsed by the parties. That while he was away on a business trip, the Respondent contacted his business partner who purported to execute the loan documents on his behalf. He maintained that he only received UGX 70,000,000 from the Respondent which he has since fully repaid with all due interest. He finally averred that the signatures purporting to be his on the loan documents are false and forged.

The Respondent opposed the application through an affidavit in reply sworn by its Legal Officer, Isiko Charles. He confirmed that the Applicant is a customer of the Respondent and stated that the Applicant applied for and obtained a loan facility from the Respondent to the tune of UGX 150,000,000 vide an offer letter executed on 22nd March 2022. The loan was to be repaid with interest at 22.5% per annum as a bullet payment within 4 months. That the Respondent duly disbursed the UGX 150,000,000 to the Applicant on 25th March 2022 and there was never any request for variation of the terms of the loan facility by way of reduction of the loan principal as the Applicant alleges.

Mr. Isiko further stated that the Applicant did not repay the loan as agreed. From the Applicant's account, the Respondent recovered UGX 148,920 on 25th July 2022, UGX 66,000,000 on 30th August 2022, UGX 2,000,000 on 30th June 2023 and UGX 40,000,000 on 24th August 2022. From the date of execution of the loan facility agreement up to 30th September 2023, the Respondent had defaulted on his loan obligations for 458 days and the arrears stood at UGX 99,888,192 as claimed in the main suit. Further that the receivables of UGX 457,175,000 from Hope Health Action which had been staked as security for the loan were all withdrawn by the Applicant upon them being paid into its account. Mr. Isiko finally averred that the Applicant's denial of execution of the loan documents is false and intended to mislead the Court.

#### **Issue arising**

Whether the Applicant has a bonafide defence which raises a triable issue in the Civil Suit No. 0227 of 2024.

### **Representation and hearing**

At the hearing of the application, Mr. Agaba Conrad (holding brief for Mr. Musisi Humphrey) appeared for the Applicant while Mr. Kakona Joel Geoffrey appeared for the Respondent. Both counsel argued the application through written submissions. I have considered their submissions, the laws and authorities they cited and all other materials on record.

#### Determination of the issue

## Whether the Applicant has a bonafide defence which raises a triable issue in the Civil Suit No. 0227 of 2024.

A defendant in a summary suit can only appear and defend the suit when he or she obtains leave of court to appear and defend the suit (See Order 36 rules 3 and 4 of the Civil Procedure Rules S. I. 71-1). In Maluku Interglobal Trade Agency v Bank of Uganda [1985] HCB 65, it was held that:

"... 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. Where there is a reasonable ground of defence to the claim, the plaintiff is not entitled to summary judgment. The defendant is not bound to show a good defence on the merits but should satisfy the court that there is 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 ..." Emphasis mine.

The true test to be applied in adjudging an application for leave to appear and defend the suit is whether or not the applicant's explanation discloses a good or plausible defence to the claim in the summary suit. Leave will often be denied if the Court is of the opinion that grant of leave would merely enable the applicant to prolong the litigation by raising untenable and frivolous defences.

The Applicant contends that his signatures to the contract financing agreement and the deed of undertaking and signing of receivables are forged. The Applicant also contends that the Respondent executed the loan documents with his business partner, one Odwori Fredrick, and not with him. Thirdly, the Applicant asserts that the Respondent approved his $2^{nd}$ application for a loan of UGX 70,000,000 and disbursed to him the same sum without any documentation.

It is trite law that whoever desires a court to believe a certain fact has the burden to prove that fact (See Section 103 of the Evidence Act Cap 6). At this stage, an applicant need not bring all the evidence that will prove his defence at the trial. He must, however, bring evidence proving that his intended defence is plausible enough to entitle him or her to appear at the hearing.

Apart from his blunt averments in the affidavit in support, the Applicant has not adduced any opinion of a handwriting expert or a police investigation report to corroborate his claim that the Respondent forged his signature to the loan documents. He did not bring any affidavit or any other statement from the said Odwori Fredrick confirming his involvement in the loan application process. There is no copy of the Applicant's alleged $2^{nd}$ application for a loan of UGX 70,000,000. The Applicant also failed to adduce his bank account statement showing a disbursement of a loan sum of UGX 70,000,000 by the Respondent or his repayment of the same.

On the other hand, the evidence laid before the Court by the Respondent is that, on 24th March 2022, the Applicant signed an offer letter for a contract financing facility of UGX 150,000,000 repayable with interest at the rate of 22.5% per annum for financing a Local Purchase Order worth UGX 457,175,000 which was issued by Hope Health Action for supply of food items. I have noticed that the signature attributed to the Applicant on that letter bears a stark resemblance with the signature he used on his affidavit in support of this application.

The Respondent also adduced the Applicant's bank account statement showing that the Respondent disbursed UGX 150,000,000 to the Applicant on 25th March 2022. On the same day, the Applicant paid UGX 94,000,000 out of that account. He subsequently paid out/withdrew all the money from his account, including all the payments that came in from Hope Health Action, yet these were meant to be the security for the loan. By the end of the 4 months' period within which he was supposed to repay the loan as a bullet payment, the Applicant hardly had any money in his account.

It is unclear why the Respondent allowed the Applicant to withdraw and take all the payments made to him by Hope Health Action before it fully recovered the loan. What is clear is that the Applicant has not been entirely honest, if at all, in this application. The evidence available shows that he agreed to a loan principal sum of UGX 150,000,000 which was duly disbursed to him and he utilised it. The

evidence further shows that he withdrew all his contract proceeds from Hope Health Action out of his account, thereby frustrating the security for the loan. He continued his insincerity in this application by making an oath alleging that he repaid all the loan principal disbursed to him, along with the accrued interest thereon, albeit without adducing any evidence corroborating those claims.

I have no doubt in my mind that the Applicant's intended defence to the claims in the main suit is a sham and would only prolong the litigation in the main suit without any good reason. I, therefore, find that the Applicant does not have a bona fide and plausible defence which raises triable issues in the main suit.

Consequently, this application fails and I hereby make the following orders:

- $\mathbf{i}$ This application is dismissed. - Pursuant to Order 36 Rule 5 of the Civil Procedure Rules, a summary ii. judgment is entered in Civil Suit No. 227 of 2024, in favour of the Respondent/Plaintiff against the Applicant/Defendant. - iii. The Applicant/Defendant shall pay the sum of **UGX 99,888,192** being outstanding loan arrears to the Respondent/Plaintiff. - The Applicant/Defendant shall pay interest to the Respondent/Plaintiff iv. (iii) above at the rate of 22.5% per annum from $30th$ September 2023 2023 until payment in full. - Costs of this application and those of Civil Suit No. 0227 of 2024 are $V$ . awarded to the Respondent/Plaintiff.

atuoa denles

Patricia Mutesi **JUDGE** $(17/07/2024)$