Scaro Africa Investments Limited v C4 Logistics Limited (Miscellaneous Application 1996 of 2024) [2025] UGCommC 108 (31 May 2025)

# 5 THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISC. APPLICATION NO. 1996 OF 2024 [ARISING FROM CIVIL SUIT NO. 1066 OF 2024.]

### SCARO AFRICA INVESTIMENTS LIMITED……………. APPLICANT

#### VERSUS

#### C4 LOGISTICS LIMITED ……………………………… RESPONDENT

#### 15 BEFORE: HON. LADY JUSTICE SUSAN ODONGO

#### RULING

This application was commenced by Notice of Motion under Order 36 Rules 3 and 4, Order 52 Rules 1, 2, and 3 of the Civil Procedure Rules, and Section 98 of the Civil Procedure Act, seeking orders that:

- 20 1. Unconditional leave be granted to appear and defend Civil Suit No. 1066 of 2024; - 2. An order for costs of the application.

#### Background

The Respondent commenced a summary suit under Order 36, vide Civil Suit 25 No. 1066 of 2024, claiming the sum of Ush 274,551,936 (Uganda Shillings Two Hundred Seventy-Four Million Five Hundred Fifty-One Thousand Nine Hundred Thirty-Six) from the Applicant. The Applicant disputes the claim, asserting non-indebtedness to the Respondent, and thus seeks leave to appear and defend the suit.


## 5 The Application and Supporting Affidavit

The provisions of the law under which this application is commenced and the orders sought under the application, have already been set out at the preamble of this ruling.

This application is supported by an affidavit sworn by Mugerwa Oscar, the 10 Applicant's Managing Director, who denies any liability or indebtedness to the Respondent. The grounds advanced in support of the application include:

- i. The Applicant has a bona fide and plausible defence to the claim in the summary plaint, which involves allegations of fraud; - 15 ii. The claim in Civil Suit No. 1066 of 2024 for Ush 274,551,936 is unknown to the Applicant, who denies owing any money to the Respondent; - iii. The Applicant has never entered into any memorandum of understanding with the Respondent, but only intended to enter into such an agreement with Double Q Co. Limited, not the Respondent.

## 20 Affidavit in Reply

The Respondent, through an affidavit sworn by Erad Muramuzi Bagira, the Commercial Manager in charge of transportation, contends that the Applicant has no reasonable defence to the claim. The Respondent avers that a memorandum of understanding was indeed entered into with the Applicant and

25 asserts that the application and supporting affidavit are replete with deliberate falsehoods.

The Applicant filed a rejoinder affidavit, which has also been duly considered.

## Applicant's Submissions

Counsel for the Applicant relied on the precedent set in *Oleru Gloria v. Bolt* 30 *Finance Co. Limited HCMA No. 16 of 2023* to establish the applicable legal principles governing applications of this nature. Counsel submitted that the Applicant denies indebtedness to the Respondent as alleged and asserts that no transactional relationship exists between the parties. Furthermore, Counsel submitted that the Applicant has duly attached a proposed written statement of

35 defence as required by law. Counsel prayed that the application be granted.


#### 5 Respondent's Submissions

Counsel for the Respondent submitted that the Applicant has failed to disclose any triable issue warranting a trial, given the existence of a memorandum of understanding between the parties. Counsel further argued that the Applicant has benefited from the Respondent's services and is therefore estopped from

10 denying the claim. Counsel prayed that this Court finds no triable issue has been disclosed and dismiss the application, proceeding to enter judgment on the summary suit.

Counsel for the Applicant made further submissions in rejoinder, which have also been considered.

## Representation and Hearing

At the hearing, the applicant was represented by Mr. Wataka Bonny, and the respondent by Mr. Mugabi Morris. Both counsels filed written submissions to argue the application. I have fully studied the submissions, the law and 20 authorities cited therein and all other materials on the record in deciding this application.

### Issues for determination

The core issues for determination is Whether the application raises bonafide issues of law and fact to warrant the grant of unconditional leave to appear and 25 defend civil suit No. 1066 of 2024?

### Determination.

## Whether the application raises bonafide issues of law and fact to warrant the grant of unconditional leave to appear and defend civil suit No. 1066 of 2024?

30 Under *Order 36 rule 4 of the Civil Procedure Rules*, unconditional leave to appear and defend a suit is granted when the applicant demonstrates the existence of a good defence on the merits; or that a complex legal question arises; or that there is a factual dispute warranting a trial; or a genuine dispute over the amount


5 claimed that necessitates an accounting; or any other circumstance indicating reasonable grounds for a bona fide defence.

The applicant must show the court that there are disputed issues of fact or law that should be adjudicated. This rule ensures that a defendant with a triable issue is not excluded from defending the suit. *(See M. M. K Engineering v. Mantrust*

10 *Uganda Ltd H. C. Misc Application No. 128 of 2012; and Bhaker Kotecha v. Adam Muhammed [2002]1 EA 112*)

In *Maluku Interglobal Trade Agency v. Bank of Uganda [1985] HCB 65*, the court stated that:

- 15 *"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. When there is a reasonable ground of defence to the claim, the defendant 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 was an issue or question in* - 20 *dispute which ought to be tried and the court shall not enter upon the trial of issues disclosed at this stage."*

In the case of *Bunjo vs KCB (Uganda) Ltd (Misc. Application No. 174 of 2014)* while considering the same principle court held that*; "It is generally accepted that the court should not enter upon a trial on any of the issues raised.* However*,* in the case of

- 25 *Corporate Insurance Co. Ltd vs Nyali Beach Hotel Ltd [1995-1998], EA7 the Court of Appeal of Kenya ruled that "leave to appear and defend will not be given merely because there are several allegations of fact or law made in the defendant's affidavit. The allegations are investigated in order to decide whether leave should be given. As a result of the investigation even if a single defence is identified, or found to be bonafide,* 30 *unconditional leave should be granted to the defendant"*. - If the applicant (defendant) raises a triable issue or shows a good reason why the case should proceed to trial, the court will grant unconditional leave to defend the suit. This means the defendant can appear and defend without conditions. Conversely, if the defendant fails to demonstrate a triable issue or cannot satisfy - 35 the court why the case merits a trial, the plaintiff will be entitled to summary judgment, effectively ending the case without a full trial.


- 5 The law requires that the defendant, when applying for leave to defend, must disclose sufficiently the nature and grounds of their defence, including the facts supporting it. The disclosed defence must be bona fide (made in good faith) and legally sound. When the court is convinced that this threshold is met, it must grant unconditional leave to defend. However, if the court doubts the good faith - 10 or genuineness of the defence, it may grant conditional leave. Such conditions may include requiring the defendant to deposit money in court or provide security before leave is granted, balancing the interests of expeditious case disposal and fairness to the defendant. *(See Children of Africa vs Sarick Construction Ltd H. C Miscellaneous Application No. 134 of 2016).* - 15 From the law as set out above, where an application for leave to appear and defend a summary suit has been filed by the defendant/Applicant, the Court will only enter summary judgment where the application raises no bona fide triable issues of fact or law or where the defence raised is found by the Court to be a sham. - 20 In the case at hand, the Applicant raises three contentions which, they claim, entitle them to be granted leave to defend the main suit.

These are that;

- i. That the applicant has a good and plausible defence to the claim in the summary plaint as it involves fraud. - 25 ii. That the claim in civil suit No. 1066 of 2024 by the plaintiff/ respondent of Ush 274,551,936= (Uganda shillings Two hundred seventy four million five hundred thousand fifty one thousand nine hundred thirty six shillings) is unknown to the applicant as she does not owe the Respondent any money. - 30 iii. That the Applicant has never entered into any memorandum of understanding with the Respondent but there was intention to enter into one with Double Q Co. limited not the Respondent.

The Respondent objects the above lines of defence arguing that they are not based on any material alternative facts presented by the Applicant and are 35 intended to cause obstruction in financial and commercial dealings which run contrary to the objective for which *Order 36 of the CPR*.


- 5 On the facts as they appear, there is no conclusive evidence as to whether there existed a memorandum of understanding between the applicant and the respondent. The memorandum of Understanding attached to the affidavit in support is between the applicant and Double Q Company Limited and not the respondent. The respondent has not attached any evidence to prove that the - 10 applicant has ever had any contractual relations with them. The applicant avers that they had dealings with Double Q Co. limited not the respondent

In the applicant's submission, it is argued that the defendant/applicant is not indebted to the Respondent, contending that the plaintiff has no cause of action, which in her view raises both triable issues of law and fact. The applicant,

15 through the deponent, made a general denial of liability or indebtedness, asserting that the memorandum of understanding presented by the respondent is a forgery. These contentions raise bona fide triable issues of fact that require investigation through a trial, particularly because they involve an element of fraud. Where triable issues involve allegations like fraud, courts recognize the

20 necessity of a trial to properly investigate the facts and such issues present reasonable grounds of defense and are sufficient to entitle the applicant to unconditional leave to defend the main suit.

The applicant is not required to convince the court that success on the substantive issue is more probable. Rather, the applicant must demonstrate to 25 the court that there exists a question or issue which can only be appropriately resolved through a full trial. It is not within the purview of the court hearing the application to adjudicate or delve into the merits of the issues presented by the applicant. The court's role is limited to determining whether a triable issue has been raised. The court must diligently scrutinize the facts to establish whether a 30 genuine triable issue exists.

In absence of such clear and conclusive evidence on the aspects of memorandum of understanding, this Court cannot make a conclusion as to whether the Applicant is indeed indebted to the Respondent and to what extent. This can only be established through evidence which has to be adduced and 35 tested at a full trial.


5 In conclusion, I have established that the application raises bona fide triable issues to be determined at a full trial.

I, consequently make the following orders:

The applicant is hereby granted unconditional leave to appear and defend the rest of the claim, being:

- 10 1. The application for leave to appear and defend civil suit 1066 of 2024 is granted in its entirety. - 2. The costs of the application are to abide the result of the suit.

Consequently, the applicant shall within ten (10) days of this order file and serve its written statement of defence upon the respondent, and within twenty-one (21)

15 days thereafter the parties should have filed their joint memorandum of scheduling, and trial bundles. Hearing of the suit is fixed for 2 nd October, 2025 at 9.00 am.

Dated, signed and delivered electronically this 31 st day of May, 2025.

20 .............................................

Susan Odongo

JUDGE

25