THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL COURT DIVISION)
5 MISCELLANEOUS APPLICATION NO. 668 OF 2019
[ARISING FROM CIVIL SUIT NO. 505 OF 2019]

ISUBIKALU TENYWA T/A LAFTAZ COMEDY LOUNGE ====== APPLICANT

VERSUS
10 NALONGO ESTATES LIMITED ====================== RESPONDENT

BEFORE: HON. MR. JUSTICE RICHARD WEJULI WABWIRE

RULING
15 This is an Application for leave to appear and defend the respondent’s
summary suit, Civil Suit No. 505 of 2019 for recovery of rent arrears,
vacant possession and costs of the suit. That suit was brought under
Order 36, rules 1&10 of the Civil Procedure Rules, SI 71-1. The
Application is supported by the Affidavit of Brian Isubikalu, the
20 General Manager of the Applicant.
The facts presented in the specially endorsed plaint and the Affidavit
in support of Sarah Kizito, a director of the respondent company are
briefly as follows: sometime back in 2014, the Applicant rented part
of the premises comprised in Plot 96-100 Kitante Road, Kampala
25 known as Centenary Park operating thereon a bar and restaurant
business t/a Laftaz Comedy Lounge. That at the time of taking the
premises it was agreed by the parties that the defendant would pay
a monthly rent of UGX 4,000,000 (Uganda Shillings Four Million)
only. That by the 17th day of December 2018, the Applicant had
30 failed, neglected and/ or refused to pay the agreed rent which was in

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 arrears amounting to UGX 54,000,000 (Uganda Shillings Fifty-
Four Million) only.
It was further deponed that upon issuing a demand notice to the
Applicant, the Applicant issued cheques to the respondent (in the
35 names of Nalongo Estates) totaling to the sum of UGX 30,000,000
(Uganda Shillings Thirty Million) which cheques were dishonored
and notice of dishonor duly communicated to the Applicant. That
despite repeated reminders, the Applicant has failed to pay the sum
due.
40 The respondent then filed Civil Suit No. 505 under summary
procedure, in this Court, to recover the said outstanding rent arrears
from the Applicant.
The Applicant was represented by M/s Namakiika & Nsiyona
Advocates while the Respondent was represented by M/s Godfrey S.
45 Lule Advocates.
When this Application came for hearing on 08th June 2020, timelines
were set for filing written submissions which the parties complied
with.
I will now consider submissions of the parties.
50 Applicant’s Submissions
The Applicant raised a preliminary objection on a point of law and
prayed that the Application be dismissed as against it with costs. The
preliminary objection raised is that that there is no known contract
between the Applicant and the respondent and therefore there is no
55 cause of action against the Applicant.
It is the Applicant’s submission that he has never in his personal
capacity entered into a tenancy agreement with the respondent as
stated in the plaint, and that the tenancy agreement was at all
material times between Fortius Limited and/ or with Laftaz Comedy
60 lounge both of which the Applicant is neither a director nor
subscriber but a mere employee (General Manager).
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 Counsel submitted for the Applicant that it is trite that a company is
an entity distinct from its shareholders and its directors as was
stated in the case of Salmon v Salmon Co. Ltd (1897) A.C. A
65 company is an independent person with its rights and liabilities
appropriate to itself and making the Applicant liable for the
company’s debt is irregular, unfair and an abuse of court process.
That although the respondent has legal grievances, severally against
Fortuis Limited, it chooses to proceed only against the Applicant.
70 Counsel submitted that in as much as a person can sue anyone to
get a remedy, the Applicant maintains that the lawful tenant since
2012 is Fortuis Limited as the principal and, that the respondent has
not adduced evidence or otherwise that there is a contractual
relationship between the parties.
75 Counsel submitted that the respondent’s suit is defective in law and
should be dismissed with costs.
Turning to the Application for leave to appear and defend, counsel
for the Applicant cited the governing law and a myriad of cases
namely; Geoffrey Gatete & Another v William Kyobe SCCA No. 07
80 of 2005, Uganda Micro Enterprises Association Ltd & 2 Ors v
The Micro Finance Support Centre Ltd, HCMA No. 125 of 2005,
Rwabuganda Godfrey v Bitamisi Namuddu, CACA No. 23/ 2009,
Kasule v Muhwezi [1992-1993] HCB 212, and Maria Odido v
Barclays Bank of Uganda Ltd, HCMA No. 645 of 2008.
85 Counsel submitted that the grounds of the Application are stated in
the Notice of Motion and Affidavit in Support.
First, that the Applicant has a good, bona fide and meritorious
defence to the suit. Secondly, that the Applicant is not indebted to
the respondent since the Applicant issued undated cheques in 2018
90 which the respondent dated and banked before filing this suit in
2019. The third ground is that the sum claimed is not a liquidated
sum capable of being recovered under summary procedure. Lastly,
that it is just, fair and equitable that the Applicants that the

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 Applicants are granted unconditional leave to appear and defend the
95 suit.
Counsel submitted on each of the aforementioned grounds. Counsel
defined what amounts to a plausible defence by relying on the case
of Remco Ltd v Mistray Jadbra Ltd (2002) (1) EA to mean bona
fide triable issues in the suit, submitting that the Applicants have a
100 plausible defence to the suit and it would be in the interest of justice
if the suit is heard on its merits. It was the Applicant’s contention
that:
a) The Tenant (Fortuis Limited) pursuant to clause 2(d) of the
tenancy agreement, constructed temporary trade fixtures for its
105 business on the vacant spaces with the express consent of the
Landlord through its representative, a one Arnold Mulindwa.
b) All fixtures which are temporary wooden and grass thatches,
were done with the intention and oral understanding with the
respondent’s representatives throughout the tenancy, that at
110 the point of separation the trade fixtures would be valued and
sold to the next tenant or be removed by the tenant.
c) To the tenant’s dismay, the landlord claimed that the trade
fixtures were its property and denied Fortuis access to remove
its trade fixtures or sell them to the next tenant. The respondent
115 proceeded to rent the trade fixtures to another tenant without
the Applicant’s consent which is grossly unfair to the tenant.
Counsel further submitted that at the determination of any tenancy
agreement, the tenant has to yield to the landlord the demised
premises duly painted, repaired after removing all its extensions,
120 additions and improvements inclusive of any fixtures and fittings
other than those which belonged to the landlord. That, this is to
ensure that the demised premises are returned fit for use by the
landlord after the tenant has made good any or all damages
occasioned on the demised premises. This common law position
125 guarantees the tenant rights to remove its lawful fixtures generally.

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 To buttress his point, counsel relied on the case of Spear House
Limited v Barclays Bank Uganda Limited, HCCS No. 236 of
2008, where Justice Henry Adonyo cited WoodFalls Law of
Landlord and Tenant, 24th Ed. (Revised and Re-modeled) by Leonel A.
130 Blundell, Sweet and Maxwell, 1939 at page 764 which states that:
‘It is a principle of law applicable to fixtures as well as other things
that individuals on entering into a contract may agree to vary the strict
position in which they would otherwise legally stand towards each
other, where no absurdity or general inconvenience would result from
135 the transaction and if the Landlord wishes to restrict his tenants’
ordinary right to remove trade machinery or fixtures he must do so in
plain language…’ (our emphasis)
Further still, the case of Clemmer Steel Craft Technologies Inc. v
Banor Meals Corp. 2009 ONCA 534 (CanLII) stated this position
140 that in order for a fixture to be considered a trade fixture which
belonged to the tenant, then such fixture should be that which was
introduced to the land and affixed thereto by the tenant and was
particular to the tenant’s business or trade and thus the tenant
would have the right to then at common law.
145 On this point, Counsel finally submitted that it is clear that the
Applicant has a good and plausible defence to the suit, and that the
respondent has not addressed itself to the issue of compensation in
its Affidavits on record and it is now up to this honorable court to
determine this issue upon the circumstances that surround it.
150 On the second and third ground, counsel submitted that although
the plaintiff does not expressly state that it brings the suit under
Order 36, rule 2(a) of the Civil Procedure Rules, the plaint which is
not specially endorsed states only rule 1), it is our assumption that
the suit was brought under Order 36 rule 2 which covers liquidated
155 claims and proceeded to reproduce the provision. Counsel cited
Black’s Law Dictionary, 8th Edition, for the definition of a

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 liquidated amount as a figure readily computed, based on an
agreement’s term.
Counsel opined that there was no evidence of how the respondent
160 computed the rent arrears to the tune of UGX 54,000,000 as alleged.
The Tenant disputes the amount due and to the best of its knowledge
and that it does not owe the respondent that money.
As seen in the plaint and respondent’s Affidavit in reply, it is stated
that the outstanding rent was UGX 54,000,000 at the time of filing
165 the suit in June 2019 but the Applicant issued cheques of UX
30,000,000 purportedly in April 2019 and yet the rent suddenly
jumped to UGX 54,000,000 at the time of demand on 17th May 2019.
That it was apparent from the plaint and annexture thereto that there
is no liquidated claim upon which the respondent is entitled to a
170 summary judgment. Reliance was placed on the case of Sterling
Travel and Tour Services Limited vs Millennium Travel Tours
Services Limited, HCMA No. 116/2013, which states that where
the claim is not liquidated within the meaning of Order 36 that alone
is enough ground to grant the Application for leave to appear and
175 defend the suit on its merits. In para. 7 of her Affidavit in reply on
behalf of the respondent, Ms. Sarah Kizito (Director) states that ‘the
respondent instituted HCCA No. 55 of 2019 against the Applicant
seeking for UGX 54,000,000 being rental arrears as had been
accumulated at the date of filing the suit, and costs of the suit. The
180 claim was partly premised on dishonored cheques.’
Counsel further submitted that there is no statement or schedule of
rental arrears attached to the plaint and it is not possible for the
Court to determine from the directors’ submission what constitutes
rental arrears, or how the costs were arrived at. That the cheques
185 referred to in the plaint were deposited by the Applicant on the
request of the respondent through Ms. Kizito not as security but as
a commitment by the tenant. That, when issuing the cheque, the
Applicant did not make representation to the respondent that there

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 were funds on the account. The agreement between them was that
190 the cheques would be returned upon clearance of rent by the tenant
as had been the norm throughout the tenancy period. When issuing
the cheques, both parties knew that there were no funds on his bank
account as the Applicant was financially distressed at that point in
time.
195 In the case of Abdullah v Republic [1970] E. A 657, it was held inter
alia that ‘the giving of a postdated cheque is not representation that
there are sufficient funds to meet the cheque’
Counsel then submitted that the questions and gaps above require
further investigation by this Court beyond what is stated in the plaint
200 and this removes this case from the ambit of liquidated demand as
defined in Order 36 rule 2(a) of the CPR. Relying on ‘The Supreme
Court Practice ‘1996, Sweet & Maxwell, London (as cited in
Sterling Travel and Tour Services Ltd vs Millennium travel
Tours Services Ltd, HCMA No. 116/2013), counsel advanced the
205 position that;
‘…if ascertainment of a sum of money even though it be specified
or named as a definite figure, requires investigation beyond mere
calculations, then the sum is not a debt or liquidated demand but
constitutes damages’
210 Counsel prayed therefore that this honorable Court finds that the
respondent’s claim is not properly brought by summary plaint
because there is no undertaking or written contract for payment of a
liquidated amount. That, the suit requires proof by adducing more
evidence which entitles the Applicants to leave to appear and defend
215 because they raise triable issues as to whether or not the Applicants
owe the respondent that amount or at all.
Lastly, counsel submitted that it is just, fair and equitable that the
Applicants are granted unconditional leave to appear and defend the
suit in accordance with Section 98 of the Civil Procedure Act, Cap.
220 71

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 Counsel prayed that this Honorable Court be pleased to find merit in
the Application to grant unconditional leave for the Applicant file
leave to defend the suit against him as per the authorities highlighted
above. Counsel also prayed that Court allows the Application without
225 costs.
Respondent’s Submissions
Counsel for the respondent responded to the preliminary objection
by the Applicant by submitting that while the Applicant disputes
indebtedness by alleging that he has no tenancy agreement or
230 contract with the respondent, he does not dispute issuing cheques to
the respondent worth UGX 30,000,000 (Uganda Shillings Thirty
Million) only which were all dishonored by the bank and referred to
para. 15 of the Affidavit in support of the motion.
Counsel submitted that it is trite law that a cheque is payment in
235 form of cash and it is not subject to the defence of lack of
consideration. To buttress this point counsel relied on the case of
Kotecha v Mohammed [2002] 1 EA 112 cited with approval in
Sembule Investments Limited v Uganda Baati Limited, HCMA
No. 664 of 2009 (unreported) where the court had the opportunity
240 to discourage the practice of issuing cheques as security in the
following terms:
“And as I observed in Dembe Trading Enterprises v Bidco (U) Ltd,
JJA HCMA N. 28/2008, the practice among businessmen and
women in Uganda of issuing cheques as security with the
245 instructions that they should not be banked or negotiated should
be strongly discouraged because it goes against the very nature
of such negotiable instruments. One cannot have a trade custom
or practice that purports to turn the law completely on top of its
head and for that reason the courts should not have countenance
250 customs such as ‘show me the money’. Although the drawer may
avoid payment of a cheque by ensuring that there are no funds

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 on their account that should not absolve him/ her in the event of
a suit such as this one based on the cheque”
Counsel submitted therefore that considering the above, the suit is
255 partly premised on dishonored cheques and the Applicant admits to
issuing the said cheques. Counsel prayed that the Court enters
judgment for UGX 30,000,000 (Uganda Shillings Thirty Million
only) since the Applicant has not raised any known defence in law
against a cheque which is a bill of exchange by its nature. That as
260 regards the issue of lack of contract or tenancy agreement which
according to the Applicant’s submission seems to be his plausible
defence to the suit, the Applicant in his submission particularly
states:
‘That he has never in his personal capacity entered into a tenancy
265 agreement with the respondent as stated in the plaint. That the
tenancy agreement was at all times between Fortius Limited and/or
Laftaz Comedy Lounge both of which the Applicant is neither a director
nor a subscriber but a mere employee (General Manager)”
Counsel’s submission was that the question the Court should ask
270 itself is on what account and/ or ground was the Applicant issuing
the cheques to the respondent upon demand for rent being made on
him and therefore in the absence of any explanation as to why he
issued the cheques to the contrary of lack of a contract then the
Court should find that there is in existence a contract since the
275 Applicant does not even dispute the outstanding sums.
Counsel contended that, as it may be, the Applicant raises three bona
fide triable issues in his submissions which seem to be the gist of his
Affidavit, namely:
1. That the tenant (Forties Limited) pursuant to clause 2 (d) of the
280 tenancy agreement constructed temporary trade fixtures for its
business on the vacant spaces with the express consent of the
landlord through its representative a one, Arnold Mulindwa.

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 2. That all trade fixture which are temporary wooden and grass
thatches were done with the intention and oral understanding
285 with the respondent’s representative throughout the tenancy
that at the point of separating the trade fixtures would be valued
and sold to the next tenant or be removed.
3. That to the tenant’s dismay. The landlord claimed that the trade
fixtures were its property and denied Fortius Limited access to
290 remove its trade fixtures or sell them to the next tenant. The
respondent proceeded to rent the trade fixtures to another
tenant without the Applicant’s consent which is grossly unfair
to the tenant.
Counsel argued that these three issues seem to set up a counterclaim
295 for Fortius Limited which is not part of this Application. Counsel
contended that this could not stand since the alleged tenancy
agreement was for a period of one year and there seems not to be
another agreement extending the said tenancy nor does a counter-
claim absolve the Applicant from paying the outstanding sums which
300 are not disputed anyway.
Counsel for the respondent declined to respond to that Applicant’s
purported issues since the suit before Court is against the Applicant
and not Fortius Limited, which is not a party to the suit,
In the premises, therefore counsel prayed that this Application be
305 dismissed for lack of merit since the Applicant has failed to
demonstrate before Court which issues shall be tried by Court when
given an opportunity.
Resolution
I have perused the pleadings, submissions and evidence presented
310 by the parties in this matter, which is an Application for grant of
unconditional leave to appear and defend brought under Order 36,
rules 3, 4 and 8 of the Civil Procedure Rules, SI No 71-1 and
Section 98 of the Civil Procedure Act, Cap 71

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 The Application is supported by an Affidavit deponed by the
315 Applicant, Brian Isubikalu which raises grounds of the Application
to justify grant of unconditional leave to appear and defend Civil Suit
No. 505 of 2019 brought by the respondent to recover rent arrears.
Order 36, rule 2 of the Civil Procedure Rules under which the
respondent brought its suit provides:
320 “2. Special endorsement on plaint
All suits _
(a) Where the plaintiff seeks to recover a debt or liquidated
demand in money payable by the defendant, with or
without interest, arising –

325 (i) upon a contract, expressed or implied (as, for

instance, on a bill of exchange, hundi,
promissory note or cheque, or other simple
contract debt);

(ii) on a bond or contract written for payment of a

330 liquidated amount of money;

(iii) On a guaranty where the claim against the

principal is in respect of a debt or liquidated
amount only;

(iv) On a trust; or

335 (v) Upon a debt to the Government for income tax; or

(b) Being actions for the recovery of land, with or without a

claim for rent or mesne profits, by a landlord against a
tenant whose term has expired or has been duly
determined by notice to quit, or has become liable to
340 forfeiture for nonpayment of rent, or against persons
claiming under the tenant,

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 may, at the option of the plaintiff, be instituted by presenting
a plaint in the form prescribed endorsed “Summary Procedure
Order XXXVI” and accompanied by an Affidavit made by the
345 plaintiff, or by any other person who can swear positively to
the facts, verifying the cause of action, and the amount
claimed, if any, and stating that in his or her belief there is no
defence to the suit.”
The import of Order 36 was espoused in the case of Post Bank v
350 Abdu Ssozi, SCCA No. 08 of 2015 which provided that:
“Order 36 was enacted to facilitate the expeditious disposal of
cases involving debts and contracts of a commercial nature to
prevent defendants from presenting frivolous or vexatious
defences in order to unreasonably prolong litigation. Apart from
355 assisting the courts in disposing of cases expeditiously, Order 36
also helps the economy by removing unnecessary obstructions in
financial or commercial dealings.
Defendants in cases which fall under Order 36 are protected by
being given the right to apply to court for leave to appear and
360 defend the suit. When the court receives their Application and is
satisfied by the defendant’s Affidavit that the defendant has
raised a genuine triable and not a sham or frivolous issue, it will
grant the defendant leave to appear and defend the suit. (Order
36 rule 4).
365 If the court is not satisfied that the defendant has raised a triable
issue, it will refuse to grant leave to appear and defend the suit,
and the plaintiff will be entitled to a decree in the amount claimed
in the plaint with interest, if any. (Order 36 rule 5)
……
370 There is no doubt that Order 36 rule 2 restricts suits to claims
based only on contract or land as spelt out in rule 2. Therefore,

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 any claim based on a different cause of action would have to be
brought by way of an ordinary suit and not under Order 36.”
Para. 3 of the Respondent’s plaint (under Order 36, rules 1&10 of the
375 CPR) reads:
“The Plaintiff’s claim against the defendant is for recovery of a
liquidated sum of UGX 54,000,000 (Uganda Shillings Fifty-
Four Million only) being rental arrears, vacant possession and
costs of the suit.”
380 A liquidated sum in rental arrears is claimed by the respondent
which is defined in Black’s Law Dictionary, 8th Edition, as a figure
readily computed, based on an agreement’s term.
The Applicant was served with summons but did not file any
pleadings within the prescribed 10 days from receipt of summons.
385 However, the Applicant then filed an Application for enlargement of
time to seek Court’s leave to appear and defend out of time which
was allowed on 04th October 2019.
By way of motion dated 10th November 2019, the Applicant filed the
Application for grant of unconditional leave to appear and defend the
390 suit; and costs of the Application. Briefly, the grounds relied upon by
the Applicant include:
1. That the Applicant has a good, bona fide and meritorious
defence to the suit.
2. That the Applicant is not indebted to the respondent
395 3. The claim by the plaintiff is fraudulent and or made in bad faith
4. That it is in the interests of justice that the Applicant be granted
unconditional leave to appear and defend the suit.
The Affidavit in support of the Applicant further supports these
grounds and raises some issues which counsel for the respondent
400 cited in his submissions and which I will consider in determining this
Application. These include:

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 1. That the tenant (Forties Limited) pursuant to clause 2 (d) of the
tenancy agreement constructed temporary trade fixtures for its
business on the vacant spaces with the express consent of the
405 landlord through its representative a one, Arnold Mulindwa.
(para. 6 of the Applicant’s Affidavit in support)
2. That all trade fixtures which are temporary wooden and grass
thatches were done with the intention and oral understanding
with the respondent’s representative throughout the tenancy
410 that at the point of separating the trade fixtures would be valued
and sold to the next tenant or be removed. (para. 7 of the
Applicant’s Affidavit in support)
3. That to the tenant’s dismay, the landlord claimed that the trade
fixtures were its property and denied Fortius Limited access to
415 remove its trade fixtures or sell them to the next tenant. The
respondent proceeded to rent the trade fixtures to another
tenant without the Applicant’s consent which is grossly unfair
to the tenant. (para. 9 of the Applicant’s Affidavit in support)
Order 36, rule 4 of the Civil Procedure Rules, provides as follows:
420 “An Application by a defendant served with a summons in Form 4 of
Appendix A for leave to appear and defend the suit shall be
supported by Affidavit, which shall state whether the defence
alleged goes to the whole or to part only, and if so, to what part
of the plaintiff’s claim, and the court also may allow the defendant
425 making the Application to be examined on oath. For this purpose, the
court may order the defendant, or, in the case of a corporation, any
officer of the corporation, to attend and be examined upon oath, or to
produce any lease, deeds, books or documents, or copies of or extracts
from them. The plaintiff shall be served with notice of the Application
430 and with a copy of the Affidavit filed by a defendant.” (Emphasis mine)
For an Application for leave to appear and defend to be granted, the
Applicant has to show that there is a bona fide triable issue of fact or
law that he will advance in defence of the suit.

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 Counsel relied on the decision of Makula Interglobal Trade Agency
435 Ltd vs Bank of Uganda [1985] HCB 65 at, page 66 in which it was
held that:
‘Before leave to appear and defend is granted, the defendant
must show by Affidavit or otherwise that there is a bona fide
triable issue of fact or law. When there is a reasonable ground of
440 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 dispute which ought to be tried and the court shall not
enter upon the trial of issues disclosed at this stage.’
445 Furthermore, in the case of Geoffrey Gatete (supra) the Supreme
Court held that:
“….an Application for leave to appear and defend a summary
suit, the court is not required to determine the merits of the suit.
The purpose of the Application is not to prove the Applicant’s
450 defence to the suit but to ask for opportunity to prove it through a
trial. What the court has to determine is whether the defendant
has shown good cause to be given leave to defend. Apart from
ineffective service of summons, what the courts have consistently
held to amount to good cause is evidence that the defendant has
455 a triable defence to the suit.
From the Application and the Affidavits in support thereof, in the
instant case, it is evident that the appellants wish to defend the
suit on the principal ground that the loan agreement is not
binding on them.”
460 The three issues raised regarding fixtures and the preliminary
objection raised by the Applicant that he is not the rightful liable
party to recover the rent arrears from, suffice as plausible defences
to support grant of leave to appear and defend the respondent’s suit.

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 It would be in the interest of justice for Court to investigate further
465 into the issues raised and resolve the claim on its merits.
Regarding the issue of fixtures, the Applicant stated that the value of
fixtures retained by the respondent would be more than sufficient to
offset the rent arrears. Secondly, there is a point of law raised on who
the rightful liable party is, whether it is the Applicant or Fortius
470 Limited. These issues ought to be explored further.
The Applicant raises both issues of law and fact that this Court
cannot ignore.
At this stage, it is not the duty of Court to delve into the merits of the
defence but rather offer an opportunity to the Applicant to adduce
475 evidence.
In the premise, the Application succeeds.
The Applicant is granted unconditional leave to appear and defend
the suit.
Costs shall be in the cause.
480 Delivered at Kampala by email to Counsel for the respective parties
and signed copies for the parties placed on file this 22nd day of
December, 2020.

………………………………………………………

485 RICHARD WEJULI WABWIRE

JUDGE

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