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M S Kots (U) Ltd v Woddamba Nathan (Civil Appeal No. 58 of 2001)

Court of Appeal · [2002] UGCA 15 · 2002 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal from a High Court ruling granting unconditional leave to appear and defend a summary suit
Decision
Appeal dismissed; High Court's grant of unconditional leave to appear and defend upheld

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Holding

The Court of Appeal dismissed an appeal against the High Court's grant of unconditional leave to appear and defend a summary suit on a dishonoured cheque. The Court held that fraud, duress, force, fear and illegality are not the only defences raising triable issues; total lack of consideration is also a defence the court may investigate, and the respondent had pleaded such. On interest, the Court held that the Bills of Exchange Act s.57(a)(ii) provides for interest but does not fix a rate, so interest is only liquidated damages where the rate is fixed by agreement or statute. A plaintiff cannot fix his own rate, and a claim for unagreed 25% interest offended Order 33, supporting the grant of leave.

Facts

The appellant filed a summary suit under Order 33 of the Civil Procedure Rules to recover Ug. Shs. 137,725,000, being the value of a cheque dated 10 September 1999 drawn on Bank of Baroda (Uganda) Ltd in the appellant's favour, which was dishonoured on 19 November 1999. The respondent, served with notice of dishonour, failed to pay. The respondent applied for leave to appear and defend, asserting he was not indebted to the appellant. He averred that goods had been supplied by a Kenyan company, Midland Emporium Ltd, to a Ugandan company, Eastern Agrey Chemicals Ltd, not to the respondent, and that the goods had already been paid for. The cheque had been issued only as security, and when relations soured, the supplier instructed its sister company, the appellant, to present the cheque to embarrass the respondent. The plaint also claimed 25% interest, although no such rate had been agreed. The High Court found triable issues and granted unconditional leave to appear and defend.

Issues

  1. Whether the matters raised by the respondent constituted triable issues entitling him to unconditional leave to appear and defend a summary suit brought on a dishonoured cheque under the Bills of Exchange Act.
  2. Whether the appellant was entitled to claim 25% interest under summary procedure where no rate of interest had been agreed upon or fixed by statute.

Orders

  • Appeal dismissed.
  • Costs of the appeal to the respondent.

Key headnotes

Bills of Exchange — Suit on Dishonoured Cheque — Defences Raising Triable Issues
Fraud, duress, force, fear and illegality are not the only defences that constitute triable issues entitling a defendant sued on a cheque to leave to appear and defend a summary suit; total lack of consideration is a defence which the court may investigate.
Bills of Exchange — Consideration — Court's Power to Inquire
Where a suit is brought on a cheque, there must be consideration; while the court cannot inquire into the sufficiency of consideration where consideration in fact exists, it may inquire into whether there was consideration at all.
Bills of Exchange — Interest — Section 57(a)(ii) — Rate Not Fixed by Statute
Section 57(a)(ii) of the Bills of Exchange Act provides for interest on a dishonoured bill but does not fix the rate; interest constitutes liquidated damages only where the rate is fixed by agreement or by statute, and a plaintiff may not fix his own rate of interest.
Summary Procedure — Order 33 — Liquidated Claims and Interest
A claim for interest that has not been agreed upon offends Order 33 of the Civil Procedure Rules, since summary procedure applies only where the sum demanded is liquidated.
Leave to Appear and Defend — Threshold — Bona Fide Triable Issues
On an application for leave to appear and defend a summary suit, the applicant need only show by affidavit or otherwise that there are bona fide triable issues of fact or law, and is not required at that stage to show that he has a good defence.

Legislation cited (6)

  • Bills of Exchange Act Cap.76 s.30(2)
  • Bills of Exchange Act Cap.76 s.57(a)(ii)
  • Civil Procedure Rules Order 33 rules 3 and 4
  • Civil Procedure Rules Order 33 rule 2(a)
  • Civil Procedure Rules Order 48 rule 1
  • Civil Procedure Act s.101

Cases cited (3)

  • Nova (Jersey) Knit Ltd v Kammgarn Spinnerei GmbH [1977] 2 All ER 463
  • Hassanali Issa & Co v Jeraj Produce Store [1967] EA 555
  • Lawrence & Sons V Willcocks 1892 QBD 696
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.