Revolt Finance Limited v Twinomuhwezi & 2 Others (Miscellaneous Application 1823 of 2022) [2024] UGCommC 271 (14 August 2024)

Key Facts

Transaction Type

Issues

• The Respondents denied receiving the loan amount, citing no disbursement evidence from the Applicant. The court found this issue requires factual investigation through the main suit.
• The Respondents argued the deed was invalid as the Applicant lacked a moneylending license. The court determined this raises a triable issue about the loan's legality.
• The court analyzed if the Respondents' challenge to the written deed's accuracy (alleging non-receipt of funds and fraud) violated Section 91. It ruled the defense was not barred as it addressed the document's validity.
• The court assessed whether the Respondents' defense, which denied receipt of USD 426,000 and alleged the deed was illegal/unenforceable, was frivolous or vexatious. It concluded the defense raises triable issues requiring evidence.
• The Respondents requested reopening the transaction to address whether USD 426,000 was paid, the Applicant had a license, and if the transaction was fair. The court agreed these legal/factual issues require full investigation.
• The court evaluated if the defense was an abuse of process by being vexatious or lacking bona fides. It found no abuse since the defense raises legitimate legal questions about the loan's validity.

Holdings

• The court held that the defense is not barred by Section 91 of the Evidence Act, as the Respondents challenge the accuracy or potential fraud of the written document rather than its terms, allowing for extrinsic evidence.
• The court determined that the Respondents' defense does not constitute an abuse of court process as it raises prima facie triable issues and is not entirely without merit.
• The court found the defense not to be frivolous or vexatious, as it raises legitimate legal questions about the loan disbursement, the legality of the deed under the Tier 4 Microfinance Act, and the fairness of the transaction, which require factual investigation.

Remedies

• The court dismissed the application as the defense raises triable issues and is not frivolous or vexatious.
• The court ordered that costs should be in cause, meaning they will be determined based on the outcome of the evidence presented.

Contract Value

Legal Principles

• The court ruled on the admissibility of an affidavit in reply, clarifying that Order 19 Rule 3 allows affidavits to be confined to facts within the deponent's knowledge or belief (for interlocutory applications). It overruled objections to the affidavit's competence.
• The court applied the parole evidence rule under Section 91 of the Evidence Act, determining it does not bar evidence of circumstances (e.g., fraud) surrounding a written agreement. It found the defence not barred by this rule.
• The court addressed the criteria for a defence to be deemed frivolous and vexatious, noting such claims lack serious purpose or value and are often pursued to harass. It found the defence raised bonafide issues requiring evidence.
• The court emphasized preliminary objections must raise pure points of law without requiring fact-finding. It dismissed the application as the defences involved factual and legal issues beyond preliminary review.
• The court considered whether the filing of the defence constituted an abuse of court process, emphasizing that such abuse involves using judicial process in a frivolous, vexatious, or oppressive manner without bona fides. It concluded the defence raised triable issues and was not an abuse.

Precedent Name

• Deox Tibeigana v Vijay Reddy
• Uganda Land Commission and Another v James Mark Kamoga and Another
• Allan Makula v First Finance Bank Limited
• King's College Budo Staff Savings Scheme Limited v Zaverio Samula & Ors
• Clessy Bakira v Jomo Robert Kashaija & Ors
• Abbas Lokhadwhala v Hippo Investments Limited & Ors
• The Attorney General of Uganda v Networth Consult Co. Ltd
• Andrew Akol v Noah Onzivua
• John Garuga Musinguzi & Anor v Dr. Chris Baryomunsi & Anor

Key Disputed Contract Clauses

• The Respondents challenged the legality of the loan agreement, arguing the Applicant's failure to hold a valid money lending license under the Tier 4 Microfinance Institutions and Money Lenders Act 2016 invalidates the contract. The court acknowledged this as a triable issue requiring evidence to determine enforceability.
• The defense requested the transaction be reopened to assess if the USD 426,000 loan terms were fair and equitable. The court recognized this as a legal issue requiring adjudication, as such determinations often depend on factual evidence about the parties' circumstances at the time of the agreement.

Cited Statute

• Constitution of Uganda, 1995
• Judicature Act
• Evidence Act
• Civil Procedure Rules (CPR)
• Civil Procedure Act
• Tier 4 Microfinance Institutions and Money Lenders Act, 2016

Judge Name

Passage Text

• Accordingly, I would take it, that whereas there are contradictions identified above, it is not apparent that the defence is without merit. ... I take the view that the Respondents' defence raises a good enough answer to the claim on the face of the pleadings and is not frivolous or vexatious.
• Having found as I have above, I would therefore dismiss this application. ... I find that in the circumstances of this case, costs should be in cause.
• As already noted above, it is not apparent on the face of the pleadings that the Respondents' defence is entirely without merit. As I have found above, the defence on the face of it prima facie raises triable issues. I therefore find that the same is not an abuse of court process.

Damages / Relief Type