Red Stone Training Institute Limited v Sebugwawo (Miscellaneous Application 195 of 2024) [2024] UGCommC 175 (25 April 2024)

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISC. APPLICATION NO. 195 OF 2024 (ARISING FROM CIVIL SUIT NO. 1695 OF 2023)**

#### **RED STONE TRAINING INSTITUTE LIMITED ::::::::::::::::::: APPLICANT**

#### **VERSUS**

#### 15 **JOYCE NABBOSA SEBUGWAWO ::::::::::::::::::::::::::::::::::: RESPONDENT**

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

#### **RULING**

#### 20 Introduction

This application was brought by Notice of Motion under **Section 98 of the Civil Procedure Act, Cap.71, Order 36 Rules 3 and 4** and **Order 52 Rules 1 and 2 of the Civil Procedure Rules SI 71-1** seeking orders that:

- 1. The Applicant be granted unconditional leave to appear and defend 25 Civil Suit No.1695 of 2023. - 2. Costs of this application be provided for.

### Background

The background of this application is contained in the affidavit of Mr. 30 Etwop Haggai, a director of the Applicant, and is summarized below:

> 1. That the Respondent instituted Civil Suit No.1695 of 2023 against the Applicant seeking to recover UGX 64,000,000/=, an eviction order and costs of the suit.

- 2. That the Applicant paid all the outstanding rent arrears as per the tenancy agreement that expired on 30th May, 2023. - 10 3. That upon the expiry of the tenancy agreement, the Applicant requested the Respondent to renew the same but the Respondent refused. - 4. That the Applicant paid for all the twelve (12) months as per the 15 tenancy agreement but for the month of May, 2023, it only paid UGX 4,000,000/= out of UGX 8,000,000/= hence making the Applicant indebted in the sum of UGX 4,000,000/=. - 20 5. That the Applicant has a tenable defense and a valid point of law against the Respondent and it can dispose of the Respondent's suit.

In reply, the Respondent opposed the application contending that:

- 1. The Applicant filed the application out of time and thus ought to have applied for extension of time within which to file this application. - 25

- 2. The Applicant has been illegally occupying the Respondent's premises since 30th May, 2023 to date without remitting any rent payments under the guise of an expired contract which has caused the Respondent a huge financial loss of UGX 64,000,000/= being the 30 rental sum collectable and due from the premises. - 3. Had the Applicant vacated the Respondent's premises, the Respondent would have accumulated UGX 64,000,000/=. - 4. It has been over eight months since the request of the grace period within which to pay the said arrears was made and the Applicant has not made any payments.

- 5 5. The claim as per paragraph 4(b) of the plaint in Civil Suit No.1695 of 2023 arises from the Applicant's continued occupation of the Respondent's premises without remitting the rent sums due and not vacating the premises as demanded. - 10 6. The Applicant has been in illegal occupation of the Respondent's premises and continues to cite reasons for their unjust behavior amidst her loss of revenue for over 11 months.

# Representation

The Applicant was represented by M/s Balyejjusa & Co. Advocates while 15 the Respondent was represented by M/s Lunar Advocates.

Both parties filed their written submissions and the same have been considered by the Court.

# Issues for Determination

- 1. Whether the Applicant has raised sufficient grounds to warrant the 20 grant of leave to appear and defend Civil Suit No. 1695 of 2023? - 2. What remedies are available to the parties?

Issue No.1: Whether the Applicant has raised sufficient grounds to warrant the grant of leave to appear and defend Civil Suit No. 1695 of 2023?

25 Applicant's submissions

Counsel for the Applicant submitted that under **Order 36 of the Civil Procedure Rules**, leave to appear and defend may be granted where the Applicant shows that he or she has a good defense on the merits, that a difficult point of law is involved, or that there is a dispute which ought to

5 be tried or a real dispute as to the amount claimed which requires taking an account to determine or any other circumstances showing reasonable grounds of a bonafide defense.

Counsel for the Applicant submitted that in the instant case, the Respondent's claim is for recovery of UGX 64,000,000/= from the 10 Applicant and the cause of action is that the Applicant defaulted on payment of rent since March, 2023 and the Respondent terminated the tenancy on 8th August, 2023 but the Applicant is, to date, still in occupation of the premises.

Counsel for the Applicant then averred that the Applicant led evidence that 15 the Applicant paid all the outstanding arrears as per the tenancy agreement save for the month of May, 2023 where it paid only UGX 4,000,000/= out of UGX 8,000,000/= that was to be paid.

Whilst relying on *Mako Warehouse Co. Ltd Vs Total Uganda Ltd HCMA No. 1031 of 2021* and *MMK Engineering Ltd Vs Mantrust (U) Ltd HCMA*

- 20 *No. 128 of 2012,* Counsel for the Applicant prayed that the application be granted as there are triable issues of law and fact such as; that the Respondent seeks to recover UGX 64,000,000/= but does not show how it arose and that the Respondent's claim is arising out of a non-existing contract. - 25 Also, that the Applicant intends to raise preliminary objections as per the Written Statement of Defence to the effect that the suit is barred by law for want of service and that the plaint does not disclose a cause of action since it is based on a non-existing contract.

#### 5 Respondent's submissions

sum being sought.

Counsel for the Respondent, while relying on the case of *Maluku Interglobal Trade Agency Ltd Vs Bank of Uganda [1985] HCB 65 at 66* submitted that the Applicant has continued to occupy the Respondent's premises without paying rent yet had the Applicant vacated 10 the premises as requested, the Respondent would have accumulated the

Counsel also submitted that before leave can be granted, the Applicant must disclose the nature and grounds of his or her defense and the disclosed defense must be both bonafide and good in law. Counsel relied 15 on the cases of *Uganda Coffee Development Authority Vs Stephen Banya Civil Suit No. 140 of 2018* wherein **Hon. Justice Musa Ssekaana** relied on the case of *Joy Tumushabe and Another Vs Anglo African Ltd and Another, SCCA No. 7 of 1999,* where it was held that;

*"When tenants defy the landlord's terms and conditions of the* 20 *tenancy agreed between the parties and the landlord prefers to repossess or effect a lawful act which the tenants continue to disregard, they become trespassers on the property concerned which is an illegal act."*

Counsel for the Respondent contended that the Applicant's defence that 25 the tenancy agreement between it and the Respondent expired and thus they are not obliged to pay rent is a sham and bad in law as they have caused great loss by their stay at the Respondent's premises as trespassers even after being asked to vacate the premises. Counsel further contended that the Applicant's actions of occupying the Respondent's

5 premises for over eight months without payment of rent consists of an illegality that cannot be condoned by the Court.

In conclusion, Counsel for the Respondent prayed that the Applicant's prayer be denied and the application struck out.

## Analysis and Determination

- 10 **Order 36 Rule 3 (1) of the Civil Procedure Rules**, stipulates that a Defendant served with summons, issued upon the filing of a specially endorsed plaint and affidavit under **Rule 2** of this Order, shall not appear and defend the suit except upon applying for, and obtaining leave from Court. - 15 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 is a bona fide triable issue of fact or law.

Further in the case of *Jamil Ssenyonjo Vs Jonathan Bunjo, H. C. Civil*

20 *Suit 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 that is subject or liable to judicial examination in Court. Therefore, a defence so raised by the Applicant should not be averred in a 25 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 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 30 constituting a defence, the Court does not attempt to decide these issues

5 or to determine whether or not there is a balance of probabilities in favour of the one party or the other.

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 10 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; or a real dispute as to the amount claimed which requires taking an account to determine; or any other circumstances showing reasonable grounds of a bonafide defence.

15 Furthermore, 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 which ought to be tried and the Court shall not enter upon the trial of* 20 *issues disclosed at this stage."*

In the instant case, the Applicant disputes its indebtedness to the Respondent contending that according to the tenancy agreement marked **annexure** "**A**" attached to the affidavit in support of the application, the Respondent and the Applicant entered into a tenancy agreement on 30th 25 May, 2022 to which the Applicant was to pay rent of UGX 8,000,000/= per month. That from the time the agreement was in force, which is 1st May, 2022 to when it lapsed on 30th April, 2023, the Applicant cleared all its outstanding rent except for UGX 4,000,000/= which was never paid in the month of May, 2023 as it only paid UGX 4,000,000/= out of UGX 5 8,000,000/= agreed to be paid per month. The Applicant however did not adduce evidence of payment of this amount of UGX 4,000,000/=.

On the other hand, the Respondent does not dispute the lapse of the tenancy agreement but avers that the Applicant has been in illegal occupation since 30th May, 2023, and due to this, she has suffered great 10 loss. Also that had the Applicant vacated the premises, she would have earned UGX 64,000,000/= from the premises as at the time of filing the Civil Suit. To prove this, she adduced the correspondences between her and the Applicant marked **annexures "A", "B'** and **"C"**.

**Annexure "A"** is a letter to the Applicant dated 8th August, 2023 15 terminating the tenancy agreement between the Applicant and the Respondent for property situated at Kyadondo, Block 178 Plots 1685, 3348 and 4426 at Nakwero A Manyagwa, Wakiso District (hereinafter referred to as "the premises"). In this letter, the Respondent brought it to the attention of the Applicant that it was in rent arrears of four months 20 and that thus the Institute had up to 7th September, 2023 to vacate the premises as well as pay all the rent and clear any outstanding bills, dues and obligations.

In response, as per **annexure** "**B**", the Applicant in an undated letter, requested the Respondent to extend the period for vacating the premises. 25 In that letter, duly signed by Mr. Etwop Haggai and 3 others, the Applicant requested for a grace period of up to four months to clear all the outstanding arrears and also look for an alternative place to house the Institute. The Applicant did not however state the amount that was due in rental arrears.

- 5 To this, the Respondent vide a letter dated 19th October, 2023 informed the Applicant that it had rent arrears for six months as per **annexure "C".** This last correspondence was received by Mr. Etwop Haggai on 13th November, 2023. - It is pertinent to note that the tenancy agreement lapsed on 30th April, 10 2023. However, from the correspondences exchanged between the Applicant and the Respondent, the Applicant remained in the premises despite communication from the Respondent relating to payment of the rent and vacation of the premises. By October, 2023, the arrears were said to be for six months and there is no evidence which shows that the 15 Applicant contested this statement about the rental arrears as at that date and therefore it is implied that the Applicant indeed acknowledged that the rent was due.

Further as per **annexure "A"** dated 8th August, 2023, the Respondent mentioned that the Applicant was in arrears for the past four months and 20 vide the Applicant's response, there is no denial of that statement or mention of UGX 4,000,000/= that the Applicant claims to have paid. The Applicant only explained the financial constraints that the Company was facing and requested for a grace period of four months to clear the outstanding arrears and to search for an alternative place to house the

25 Institute.

In addition, the Applicant's argument that the claim is based on a nonexisting agreement is not a good defence according to the facts of this matter to warrant the grant of leave to appear and defend the main suit. The Applicant in the affidavit in support under paragraph 7 stated that in 30 the month of May, 2023, the Applicant paid an instalment of UGX 4,000,000/= out of the rental fee of UGX 8,000,000/= and that the balance

- 5 is UGX 4,000,000/=. This in itself is an admission of the fact that rent was due and payable even after expiry of the tenancy agreement since the Applicant stayed in the premises. Clause 1 of the tenancy agreement provided that the tenancy was for a period of 12 months from 1st May, 2022 to 30th April, 2023 and the Applicant's Counsel rightly indicated this - 10 expiry date in the submissions. Therefore, the month of May, 2023 was after the aforementioned tenancy agreement had expired which defeats the Applicant's ground of a non-existing contract as a defence to refusing to pay the rent due. - Clearly in my view, the Applicant did not deny the rental arrears and even 15 when the months in rental arrears were categorically mentioned in the letters from the legal representatives of the Respondent, the Applicant did not dispute the same.

According to paragraph 11 and **annexure** "**B**" of the affidavit in support of the application, the Applicant stated that it intends to raise preliminary 20 objections such as; that the suit is barred by law for want of service and that the plaint does not disclose a cause of action.

My view is that this is not a triable issue to warrant the grant of leave to appear and defend the main suit since the Applicant stayed in the premises of the Respondent and did not vacate the premises neither was 25 rent paid for the same. It is not indicated anywhere in the pleadings that the Respondent availed her premises to the Applicant for free to presume that no rental payments are due for the period that the Applicant continued to occupy the premises, even after the expiry of the tenancy agreement. It is only fair and just for the Applicant to settle the rental 30 arrears for the period that the Institute has been in occupation of the premises belonging to the Respondent.

- 5 In addition, the issue of service is also not tenable since the Applicant filed this application in response to the suit filed against it and the affidavit of service clearly states that the Applicant's director was served with the summons. This is therefore not a triable issue of fact or law in my considered view. - 10 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 except for the grant of the claim.

I am therefore convinced that the Applicant is indebted to the Respondent in the sum claimed in the plaint of UGX 64,000,000=. The Applicant contended that the Respondent seeks to recover UGX 64,000,000/= but does not show how it arose. My view is that the Respondent expounded on 20 the basis of the claim for UGX 64,000,000/= being that the monthly rent

was UGX 8,000,000= and by 19th October, 2023 the Applicant was in arrears of six months and therefore by the time the suit was filed on 18th December, 2023, the period in issue was eight months, which is consistent with the claim for UGX 64,000,000/=.

Further, the Applicant does not dispute being in occupation of the Respondent's premises in its pleadings.

In the given circumstances of this case, I find that the Applicant failed to 30 raise any triable issue of fact or law, and that it has a good defence on the merits of the case.

Accordingly, Issue No. 1 is resolved in the negative.

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

This Court having found issue (1) above in the negative, further finds that this application for leave to appear and defend is devoid of merit.

- It is settled law that summary procedure provides a quick way for the 10 Plaintiff who demands a liquidated sum to obtain judgment where there is no evident defence. (See: *Post Bank (U) Limited Vs Abdul Ssozi, SC Civil Appeal No. 8 of 2015,* and *Ndibazza Naima Vs Acacia Finance Limited HCMA No. 1144 of 2014 (Arising from HCCS No. 501 of 2014).* Accordingly, this application is dismissed, and the Respondent/Plaintiff is - 15 entitled to a Decree under **Order 36 Rule 5 of the Civil Procedure Rules SI 71-1.**

The Respondent/ Plaintiff further prayed for an order of eviction against the Applicant/ Respondent. The Applicant was informed vide the letter 20 dated 8th August, 2023 that the Institute had up to 7th September, 2023 to give vacant possession and pay the rental arrears which was not adhered to by the Applicant. It is not in dispute that the Respondent is the owner of the premises being occupied by the Applicant and this was further stated in the tenancy agreement which the Applicant and 25 Respondent signed dated 30th May, 2022. The Applicant as per paragraph 5 of the affidavit in support of the application stated that the Applicant went to the Respondent and requested for extension of the tenancy but that the Respondent refused to renewed the same.

30 However, the Applicant refused to vacate the premises and also failed to pay rent. **Section 44 of the Landlord and Tenant Act, 2022** provides for vacation of premises on termination of tenancy. In this instant matter the date for vacation of the premises was not complied with by the Applicant.

- 5 In the circumstances, 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 the premises. - 10

On the issue of costs, **Section 27 (2) of the Civil Procedure Act** provides that costs of any cause follow the event unless otherwise ordered by 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 15 that:

> *"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 therefore entitled to costs of this suit.

Judgment is hereby entered for the Respondent/Plaintiff against the 25 Applicant/Defendant in the following terms: -

- 1. The Respondent/Plaintiff is entitled to a sum of UGX 64,000,000/= (Uganda Shillings Sixty-Four Million Only) in Civil Suit No. 1695 of 2023. - 30 2. The Applicant/Defendant to give vacant possession of the suit premises to the Respondent/Plaintiff, not later than seven (7) days from the date of this Ruling, failing which eviction shall issue. - 3. The Respondent/Plaintiff is awarded costs of this application and the

35 suit.

5 I so order.

Dated, signed and delivered electronically this **25th** day of **April**, **2024.**

10 Patience T. E. Rubagumya **JUDGE** 25/04/2024 7:45am