Wakilii

Ssengoba v Messrs Kiboko Enterprises Ltd (Miscellaneous Application No. 1206 of 2016)

High Court · [2017] UGCOMMC 72 · 2017 Application Partly Allowed — Conditional Leave Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for leave to appear and defend arising from a summary suit for recovery of money
Decision
Conditional leave to defend granted subject to payment of security

Observed later treatment

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Holding

The court held that the applicant raised bona fide triable issues including the identity of the proper defendant (natural person versus limited liability company), whether the cheques were issued as security, and the context of the alleged debt. The application disclosed a point of law regarding whether a limited liability company can be sued as if it is an enterprise in whose name a party may trade. Conditional leave to defend was granted requiring the applicant to deposit UGX 10,000,000 as security within 45 days.

Outcome

Conditional leave to defend granted subject to payment of security

Facts

The respondent sued the applicant in a summary suit claiming UGX 78,000,000 for goods allegedly supplied. The claim consisted of UGX 36,000,000 secured by three personal cheques issued by the applicant which bounced, and UGX 42,000,000 unsecured. The applicant sought unconditional leave to defend, contending he never dealt with the respondent personally, that the respondent dealt with Asuaco Enterprises Ltd (a registered company), that the cheques were issued as security for company debts which were subsequently paid, and that he attached receipts totalling UGX 38,000,000 showing payment. The respondent countered that the applicant personally ordered the goods, that the cheques were unconditional payment instruments payable on demand, and that the receipts belonged to Asuaco Ltd and were dated 2016 after the personal claim arose. The plaint described the defendant as "Ssengoba John Baptist trading as Asuaco Ltd" but stated he was sued as a natural person.

Issues

  1. Whether the applicant raised a bona fide triable issue warranting leave to defend the summary suit.
  2. Whether the goods were supplied to the applicant personally or to Asuaco Enterprises Ltd.
  3. Whether the cheques were issued as security or as unconditional payment instruments.
  4. Whether the proper defendant is the natural person or a limited liability company.

Orders

  • Applicant granted conditional leave to file a defence within 14 days from the date of this order.
  • Defence to be filed on condition that the applicant deposits in court a sum of UGX 10,000,000 as security within 45 days.
  • Costs of the application to abide the outcome of the main suit.

Rules and key headnotes

Summary Suits — Leave to Defend — Test for Granting Leave
An applicant is entitled to leave to defend a summary suit if able to show a good defence on the merits, that a difficult point of law is involved, that there is a dispute as to the facts which ought to be tried, a real dispute as to the amount claimed requiring an account to determine, or any other circumstances showing reasonable grounds of a bona fide defence.
Bills of Exchange — Cheques — Defence to Summary Judgment on a Cheque
Where an application is made for summary judgment in respect of a claim on a bill of exchange, cheque, or promissory note, the general rule is that leave to defend will not be given save in exceptional circumstances. A bill of exchange is normally to be treated as cash and the holder is entitled in the ordinary way to judgment. Special circumstances may entitle a defendant to leave to defend, such as where the cheque was issued by a guarantor for a principal debtor who has paid.
Corporate Personality — Distinction Between Company and Directors — Proper Party to Sue
The law on corporate personality clearly distinguishes a company from its directors or shareholders except where there is a lifting of the corporate veil. Where a plaint describes a defendant as a natural person trading as a limited liability company, this raises a point of law as to whether a limited liability company can be sued as if it is an enterprise in whose name a party may trade, and whether the proper defendant is the natural person or the company.
Summary Suits — Conditional Leave to Defend — Security for Costs
Where an applicant's defence does not go to the entire sum claimed and there is a portion of the claim that appears less contestable, the court may grant conditional leave to defend requiring the applicant to deposit security in court as a condition for filing a defence.

Cases cited (4)

  • Kotecha v Mohammed [2002] 1 EA 112
  • Sembule Investments Ltd v Uganda Baati Ltd (Miscellaneous Application No. 006 of 2009)
  • James Lamont and Company Limited v Hyland Limited [1950] 1 KB 585
  • Brown, Shipley and Company Limited v Alicia Hosiery Limited [1966] Rep 668

Full judgment

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

Ssengoba v Messrs Kiboko Enterprises Ltd (Miscellaneous Application No. 1206 of 2016) [2017] UGCommC 72 (16 June 2017)
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.