WK's Hardware Limited & Another v Stanbic Bank (U) Limited (Miscellaneous Application 430 of 2023) [2021] UGHC 68 (21 June 2021)

Full Case Text

### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA HOLDEN AT MBALE

# **MISCELLANEOUS APPLICATION NO.430 OF 2023**

# (ARISING FROM CIVIL SUIT NO.004 OF 2022)

#### 1. WK'S HARDWARE LIMITED

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2. WAMUKWE KADIRI :::::::::::::::::::::::::::::::::::

#### **VERSUS**

**STANBIC BANK (U) LIMITED ::::::::::::::::::::::::::::::::::::**

### BEFORE HON. JUSTICE LUBEGA FAROUQ

#### **RULING**

### 1. Introduction

2. This application was brought by way of notice of motion under section 33 of the Judicature Act, Section 98 of the Civil Procedure Act, Order 36 Rule 11 and Order 52 Rules 1, 2 & 3 of the Civil Procedure Rules S.1 71-1 for orders that- the default judgment and decree entered in Civil Suit No.004 of 2023 be set aside, Applicants be granted leave to appear and defend Civil Suit No.004 of 2023 and costs of this application be provided for.

# 3. Background

- 4. The Respondent lodged a summary suit vide Civil Suit No.004 of 2022 against the Applicants on 7th March 2022 for the following orders- - (a) Ugx 350,075,481 (Uganda shillings three hundred five million seventy-five thousand four hundred eighty-one only) - (b) Interest at 28% per annum from the date of default till payment in full and - (c) Costs of the suit.

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- 5. The summons in summary suit on the plaint in respect of the above suit was served on the Applicants on 16th of March, 2022 as per the affidavit of service sworn by Okwi Elly Timothy of M/S S&L Advocates. - 6. The Applicants having failed to file an application to appear and defend within the required 10 days period, the Respondent on 11th of April, 2022 applied for a judgment to be entered in favour of the Plaintiff in the terms prayed for in the specially endorsed plaint. - 7. However, the Applicants filed an application for leave to appear and defend on $30th$ of March, 2022 far beyond the statutory period, and the same was withdrawn as per the letter dated 19th of October, 2022 which was written by S&L Advocates to the Assistant Registrar of this court. - 8. Following the above background, a default judgment was entered in favour of the Plaintiff on $27$ th of October, 2022. - 9. This application was supported by the affidavit of the $2^{nd}$ Applicant **WAMUKWE KADIRI** which has been relied upon in the determination of this application and briefly states that - a. The Respondent lodged a summary suit vide Civil Suit No.004 of 2022 against the Applicants for recovery of a sum of UGX 467,425, $096/$ =; - b. The Applicants, immediately upon being served with summons in the aforesaid suit, instructed their previous advocates, Masanga & Co. Advocates, to represent them in the said suit and accordingly file all necessary pleadings on their behalf; - c. As a matter of fact, on $24^{th}$ March 2022, the $2^{nd}$ Applicant deponed an affidavit in support of an application for leave to appear and defend and specifically instructed his previous advocate to file the said application within the mandatory statutory period; - d. Unfortunately, the Applicants' previous advocate negligently filed the application for leave to appear and defend Civil Suit No.004 of 2022 vide Miscellaneous Application No.118 of 2022 on 30th March 2022 beyond the statutory period;

- e. Unfortunately, the Applicants' previous advocates again erroneously filed Miscellaneous Application No.416 of 2022 for extension of time within which to file the aforesaid application on 23rd September 2022 and the same was scheduled for hearing on 1st March 2023; - The Applicants have on several occasions demanded to know the status of $f$ . their matter from their previous advocate but no information was forthcoming; - g. After the persistent demands, the Applicants' previous advocate on the 14th November 2023 issued a request to the Registrar of the High Court to schedule Miscellaneous Application No.118 of 2022 for hearing; - h. On 1st December 2023, the Applicants were surprised to discover that a warrant of arrest for the recovery of UGX $467,425,096$ /= had been issued; - This was erroneous because the Applicants have not been heard on the $\dot{1}.$ merits of Civil Suit No.004 of 2022; - j. The Applicants have a valid and tenable defence to the claims in Civil Suit No.004 of 2022; - k. There is no valid contract between the parties and there are no obligations owed against the Applicants to the Respondent; - 1. The Respondent has acted in breach of its statutory and fiduciary duty by effecting irregular, improper and unlawful debits off the 1st Applicant's accounts; - m. There are triable issues of law regarding the validity, tenability and legality of the purported contract between the parties; - n. The Applicants should not be penalized for the negligence and/or mistake of their previous advocates and should not be condemned to pay such colossal sums without being heard; - o. The failure, mistake and/or omissions of the Applicants' previous advocates amount to good cause to warrant the setting aside of the default judgment and the grant of leave to appear and defend; - p. Throughout those matters, the Applicants were vigilant in instructing their previous advocates to represent their interests in civil suit No.004 of 2022;

- q. The 2nd Applicant endorsed upon the affidavit in support of the application for leave to appear and defend within time but the same were filed out of time by the mistake/negligence of their previous Advocates. - This application was opposed by the affidavit of NORRIS MUTAHUNGA $10.$ the officer legal rehabilitation and recoveries for the Respondent, duly authorized to make that affidavit and well versed with the facts in this matter, and the same has been relied upon in the determination of this application and briefly states that - a. This application is an abuse of the court process intended to frustrate the Respondent's effort to recover the decretal amounts now standing at the sum of UGX. $467,425,096$ = inclusive of interest and costs and the same ought to be dismissed with costs; - b. The Applicant has not proved the grounds for setting aside a judgment/decree; - c. On 9th March 2022, the Respondent filed HCCS No.004 of 2021 (a summary suit) for recovery of a sum of UGX 350,075,481/= arising from a credit facility which had been advanced to the 1st Applicant who utilized the same but failed to repay back; - d. On 30th March 2022, the Applicants filed Miscellaneous Application No.118 of 2022 for leave to appear and defend the main suit but did not take any steps to cause the application to be fixed for hearing; - e. On 14th June 2022, the Respondent through their lawyers S&L Advocates requested this court to fix Miscellaneous Application No.118 of 2022 for hearing and it was upon the Respondent's request that the same was fixed for hearing; - f. On 19th October 2022, when Miscellaneous Application No.118 of 2022 came up for hearing, the Applicants withdrew it and the Respondent applied for summary judgment and the judgment was granted; - The Applicants withdrew Miscellaneous Application No.118 of 2022 g. because they were aware that it had no merit;

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- h. The Respondent is not aware of and has never been served with any copy of Miscellaneous Application No.416 of 2022 which was for extension of time and validation of the Miscellaneous Application No.118 of 2022 and the same was overtaken by events when the Applicants on their own volition elected to withdraw Miscellaneous Application No. I18 of 2022; - i. Miscellaneous Application No.416 of 2022 for extension of time was filed out of time, five months after the filing of the application for leave to appear and defend; - j. Miscellaneous Application No.416 of 2022 was fixed for hearing on 1st March 2023 but to date the Applicants have never extracted it for service on the Respondent or prosecuted it in any manner whatsoever; - k. Applicants were well aware of the taxation proceedings which ensued thereafter the judgment entered on the 27th October 2022; - 1. The Applicants are bound by the actions of their lawyers and cannot rely on the alleged negligence of counsel to evade liability for the following reasons; - m. The Applicants have not demonstrated any effort they took to follow up with their application; - n. The Applicants are in contempt of court process having refused to appear before court to show cause why execution could not issue and yet they had been served with a notice to show cause personally; - o. Even if court was to exercise its discretion to consider to grant the Applicants leave to appear and defend the suit, such application would be without merit as the Applicants have no plausible defence to the suit and have not disclosed the same in this application or in the Miscellaneous Application No.118 of 2022.

#### 11. **Legal representation**

Counsel Nangulu Eddie appeared for the Applicants while counsel Allan 12. Wanyali represented the Respondent.

#### **Submissions** 13.

At the hearing of this application, counsel were given schedules to file their 14. respective written submissions but they all did not comply.

#### 15. **Analysis of court**

- It is trite that a default judgment can be set aside by court if the applicant 16. was not served or for any other good cause. - 17. Order 36 Rule 11 of the Civil Procedure Rules SI 71-1 provides-

"After the decree the court may, if satisfied that the service of the summons was not effective, or for any other good cause, which shall be recorded, set aside the decree, and if necessary stay or set aside execution, and may give leave to the defendant to appear to the summons and to defend the suit, if it seems reasonable to the court so to do, and on such terms as the court thinks fit."

The Supreme Court of India in the case of Arjun Singh vs Mohindra $18.$ Kumar & Ors on 13 December, 1963 held-

> "There is no material difference between the facts to be established for satisfying the two tests of "good cause" and "sufficient cause". *There cannot be a "good cause" which is not "sufficient"......"*

The Supreme Court of India in the case of **Parimal versus Veena** @ **Bharti** 19. Civil Appeal No.1467 of 2011 further held-

> "The meaning of the word "sufficient" is "adequate" or "enough" in as much as may be necessary to answer the purpose intended. In this context sufficient cause means a party had not acted in a negligent *manner or there was want of bona-fide on its part in view of the facts* and the circumstances of each case."

Further in Florence Nabatanzi vs Naome Blnsobodde Supreme Court 20. **Civil Application No.6 of 1987**, court laid down principles to be followed by courts when faced with situations like in the instant case which include among others-

> "First and foremost, the application must show sufficient reason which relates to the inability or failure to take some particular step

within the prescribed time. This is a general requirement not withstanding that each case must be decided on its own facts;

A vigilant Applicant should not be penalized for the fault of his Counsel on whose actions he has no control."

- In the instant case, the Applicants aver in paragraph 5 of the affidavit that 21. their previous advocate negligently filed the application for leave to appear and defend Civil Suit No.004 of 2022 vide Miscellaneous Application No.118 of 2022 on 30th March 2022 beyond the statutory period. - The Applicants also aver in paragraphs 6 and 7 of the affidavit in support 22. that their previous advocates again erroneously filed Miscellaneous Application No.416 of 2022 for extension of time within which to file the aforesaid application on 23rd September 2022 and the same was scheduled for hearing on 1st March 2023 but they have on several occasions demanded to know the status of their matter from their previous advocate but no information was forthcoming. - On the other hand, the Respondent avers in paragraphs 8 and 9 of the 23. affidavit in reply that it is the Respondent who on 14th June 2022, requested this court to fix Miscellaneous Application No.118 of 2022 in respect of application for leave to appear and defend and the same was fixed for hearing on 19th October 2022, and the Applicants withdrew it which made the Respondent to apply for a summary judgment and it was granted. - The Respondent attached **annexure A** to the affidavit in reply which is 24. letter through their advocate requesting court to fix Miscellaneous Application No.118 of 2022 for hearing. - The Applicants have not adduced any evidence to prove that they took any 25. steps beyond inquiring from their former lawyers to have Miscellaneous Application No.118 of 2022 filed within time and fixed for hearing, neither have they adduced evidence to prove that they were prevented by good cause to appear at the hearing of Miscellaneous Application No.416 of 2022 for extension of time within which to file the aforesaid application for which they were aware that it was scheduled for hearing on $1^{st}$ March 2023.

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- The Applicants' averment that they have on several occasions demanded 26. to know the status of their matter from their previous advocate but no information was forthcoming is not sufficient since they ought to have taken steps beyond just inquiring from their former lawyer but to be vigilant in following up on their matter. - Further still, Regulation 2 (1) of the Advocates (Professional Conduct) 27. **Regulations** provides that;

"No advocate shall act for any person unless he or she has received instructions from that person or his or her duly authorized agent"

28. Section 50 (1) of The Advocates Act Cap 267 provides that-

time any rules for the "*Notwithstanding* being in force, an advocate may make an agreement with his or her client as to his or her remuneration in respect of any contentious business done or to be done by him or her providing that he or she shall be remunerated *either by a gross sum or by salary.*"

- 29. In the view of the above provisions of the law, it is apparent that for an advocate to act for the client, he or she must have received instructions from the client and the same may be reduced into writing. - 30. For a given period of time now, it has been observed by this court that there are several applications and suits where parties fail to comply with procedural requirements and blame the mistake on their advocates but they never tender in court anything to prove that instructions where given to those advocate or that those instructions were still valid as required by the law. - 31. Although admittedly lawyer-client relationship can be established from circumstances, in my view each case must be handled depending on its own facts. - 32. In the present case, the Applicant avers that after receiving the summons, they immediately instructed their previous Advocates, Massanga & Co. Advocates to represent them in the said suit and file the necessary pleadings on their behalf. There is however, no document of instruction or agreement indicating that the said Advocate has ever acted for the Applicants in this

particular matter to prove that instructions were indeed given to the advocate within the required time frame.

- If there was a written agreement of instructions, it would be easy for this 33. court to determine that indeed it was a mistake of the advocate. - I am aware of section 10 of the Contracts Act of 2010 which provides that 34. an agreement may be oral or written but where it exceeds twenty-five currency points i.e. $Ugx: 500,000/$ = (Five hundred thousand shillings), it must be reduced into writing. - 35. Therefore, in matters of this nature where the client puts the blame on an advocate, it would be prudent and given more weight if an agreement of instructions is tendered in court as proof of the same. - In the circumstance, the Applicants failed to prove any sufficient cause 36. that prevented them from filing their application for leave to appear and defend, having been served within time. - 37. However, before I take leave of this matter, it is pertinent to note that a litigant has a duty to personally follow-up his or her case and also take necessary steps which are within his or her control to make sure that the case is heard to its final conclusion and not to leave the entire management of the case to his or her advocate. - In the final result, this application discloses no grounds for setting aside 38. a default judgment and it is accordingly dismissed in the terms below- - (a) The default judgment and decree entered in Civil Suit No.004 of 2023 is hereby upheld; - a. Leave to appear and defend Civil Suit No.004 of 2023 is hereby denied; - b. Costs are awarded to the Respondent.

I so order.

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Ruling delivered via email of the parties this $21^{st}$ Day of June 2021