Diamond Trust Bank (U) Limited and Another v Ham Enterprises Limited and 2 Others (Civil Appeal 242 of 2020)

Observed later treatment

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

The Court of Appeal held that the trial judge erred in striking out the appellants' written statement of defence and entering judgment for the plaintiffs. Order 9 rules 6, 8 and 10 were inapplicable because the defendants had filed a defence and the claim was not liquidated; Order 9 rule 30 does not exist. Striking out under Order 6 rule 30 is a summary procedure confined to plain and obvious cases decided on pleadings alone, not to contested questions of mixed law and fact such as the legality of foreign bank lending. The amended plaint introduced a fresh cause of action and was struck out. The appeal succeeded, the judgment was set aside, and the suit was remitted for fresh hearing before another judge on the original pleadings.

Outcome

Appeal allowed; trial judgment set aside and suit remitted to the High Court (Commercial Division) for fresh hearing before another judge on the original pleadings

Facts

The respondents (Ham Enterprises Ltd, Kiggs International (U) Ltd and Hamis Kiggundu) sued the appellant banks in the Commercial Division over credit facilities and mortgages. The original plaint claimed breach of contract and related relief. At scheduling, the parties agreed and the court ordered appointment of an independent auditor to reconcile the loan accounts. The plaint was later amended on 10 August 2020, substituting a new claim alleging that the second appellant (a Kenyan bank) conducted unlicensed financial institutions business in Uganda, that the facilities were illegal and unenforceable, and claiming a refund of UGX 34,295,951,553 and USD 23,467,670.61. The respondents then applied to strike out the appellants' joint written statement of defence as a perpetuation of illegalities. The trial judge struck out the defence and entered judgment for the plaintiffs under Order 9 rules 6, 8, 10 and 30 and Order 52, awarding the sums, declarations, discharge of mortgages, an injunction and costs. The appellants appealed.

Issues

1. Whether the learned trial judge erred in law and in fact in striking out the appellants' joint written statement of defence.
2. Whether the learned trial judge erred in law in entering judgment for the plaintiffs under Order 9 rules 6, 8, 10 and 30 of the Civil Procedure Rules.
3. Whether the amendment of the plaint, substituting a fresh cause of action, was permissible in law.
4. Whether a court may determine a contested question of the legality of loan transactions and enter judgment for large sums on the basis of pleadings alone without hearing evidence.

Orders

• Appeal allowed.
• The judgment and orders of the trial judge are set aside.
• The amended plaint and amended written statement of defence are struck out, leaving the original plaint and written statement of defence on record.
• The suit is remitted to the Commercial Division of the High Court to be expeditiously fixed and heard by another judge on the pleadings before the amendment.
• Costs of the appeal to be borne by the respondents.

Rules and key headnotes

Legislation cited (20)

• Civil Procedure Rules Order 9 rule 6
• Civil Procedure Rules Order 9 rule 8
• Civil Procedure Rules Order 9 rule 10
• Civil Procedure Rules Order 6 rule 28
• Civil Procedure Rules Order 6 rule 29
• Civil Procedure Rules Order 6 rule 30
• Civil Procedure Rules Order 6 rule 10
• Civil Procedure Rules Order 7 rule 11
• Civil Procedure Rules Order 15 rule 2
• Civil Procedure Rules Order 52 rules 1, 2 and 3
• Civil Procedure Act s.98
• Contracts Act 2010 s.54
• Contracts Act 2010 s.25(2)
• Financial Institutions Act 2004 s.4(1)
• Financial Institutions Act 2004 s.117
• Financial Institutions Act 2004 s.126(3)
• Financial Institutions (Agent Banking) Regulations 2017 reg.5
• Judicature (Court of Appeal Rules) rule 2(2)
• Judicature (Court of Appeal Rules) rule 36(1)
• Judicature (Court of Appeal Rules) rule 43(3)(a)

Cases cited (29)

• N.A.S Airport Services Limited v The Attorney General of Kenya [1959] EA 53
• Mulowooza and Brothers Ltd v N. Shah & Co. Ltd (Civil Appeal No. 26 of 2010)
• Eastern Bakery v. Castelino Civil Appeal No. 30 of [1958] EA 461
• Mistry Amarsingh v Serwano Wofunira Kulubya [1963] 1 EA 408
• Hunt v Rice & Son, Ltd. (1937) 53 T.L.R. 931
• Clarapede & Co. v. Commercial Union Associations (1883) 32 W.R. 262
• Dillon v Balfour (1887) 20 L. R. Ir. 600
• Auto Garage vs Motokov [1971] EA 514
• Uganda Broadcasting Corporation v Sinba (K) Ltd and Others (Civil Application No. 12 of 2014)
• Makula International Ltd v Cardinal Nsubuga (Civil Appeal No. 4 of 1981)
• Kisugu Quaries Ltd versus Administrator General (1999) 1EA 162 (Supreme Court)
• Broadway Construction Co, versus Kasule & others [1972] EA 76
• Kyagulanyi Coffee Ltd v Francis Sembuya (Civil Appeal No. 41 of 2006)
• Shell (U) Ltd v Rock Petroleum (U) Ltd (Civil Suit No. 645 of 2010)
• Active Automobile Spares Ltd v Crane Bank Ltd (Civil Appeal No. 21 of 2011)
• Crane Bank Ltd v Belex Tours and Travel Ltd (Civil Appeal No. 6 of 2013)
• Ismail Serugo v Kampala City Council and Attorney General (Constitutional Appeal No. 2 of 1998)
• Haji Asuman Mutekanga v Equator Growers (U) Ltd (Civil Appeal No. 7 of 1995)
• Wenlock v. Moloney and Others [1965] 2 All E.R 871
• Drummond Jackson v British Medical Association [1970] 1 ALL ER 1094
• Hubbuck & Sons, Ltd v. Wilkinson, Heywood & Clark, Ltd [1899] 1 G.B. 86
• Steeds and Another V. Steeds and Another (1889) 22 Q.B.D. 537
• Tinyefuza v Attorney General (Constitutional Appeal No. 1 of 1997)
• Attorney General v Oluoch [1972] EA 392
• Jeraj Shariff v Fancy Stores [1960] 1 EA 374
• Nurdin Ali Dewji & others v G.M.M Meghji & Co. and Others (1953) 20 EACA 132
• Bostel Brothers Ltd v Hurlock [1948] 2 All ER 312
• Phoenix General Insurance Co of Greece SA v Administratia Asigurarilor de Stat [1987] 2 All ER 152
• Scott v. Brown, Doering, McNab & Co [1892] 2 Q.B. 724

Cases citing this judgment (2)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

• Ham Enterprises Limited and 2 Others v Diamond Trust Bank(U) Limited and Another (Civil Appeal 13 of 2021)
• Bank of Uganda and Ors v Ham Enterprises Ltd (Civil Application No. 16 of 2021)

The original judgment as reported. Read the original PDF before relying on any passage.