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Jing Hong and Another v Barclays Bank of Uganda Limited (Civil Appeal 135 of 2012)

Court of Appeal · [2021] UGCA 214 · 2021 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal from a High Court (Commercial Division) ruling that a suit against guarantors was not barred by res judicata
Decision
Appeal dismissed; HCCS No.35 of 2009 to proceed and be determined on its merits

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Holding

The Court of Appeal dismissed the appeal, holding that the later suit against the appellants as guarantors was not barred by res judicata. The earlier suit was between the corporate borrower and the bank, while the later suit was between the bank and the appellants in their individual capacity as guarantors. The parties and causes of action differed: the liability of a principal debtor and that of a surety are separate, though arising from the same transaction. A creditor may sue guarantors independently upon the borrower's default. The question whether the guarantors remained liable had never been adjudicated in the earlier suit. The trial court correctly held res judicata inapplicable, and the guarantee suit was to proceed on its merits.

Facts

Barclays Bank advanced money to Jinda International Textiles Corporation Ltd on 28 October 2004. The appellants, Jing Hong and Guo Dong, guaranteed repayment in writing on 22 September 2004 and 12 November 2004. The borrower defaulted, and the guarantors were called upon to meet their obligations. Earlier, in HCCS No.156 of 2008, the borrower sued the bank challenging receivership; the bank counterclaimed for the outstanding loan and obtained judgment on the counterclaim when the borrower failed to reply. The bank then filed HCCS No.35 of 2009 against the two guarantors to recover the guaranteed sum of USD 2,450,000. The guarantors contended that the matter had already been adjudicated and that the later suit was barred by res judicata. The High Court (Commercial Division) ruled the suit was not barred and ordered the hearing to proceed. The guarantors appealed.

Issues

  1. Whether HCCS No.35 of 2009 against the appellants as guarantors was barred by the doctrine of res judicata under section 7 of the Civil Procedure Act, given the earlier HCCS No.156 of 2008.
  2. Whether the parties and causes of action in the two suits were the same so as to engage the doctrine of res judicata.
  3. Whether judgment establishing the principal debtor's liability barred a subsequent suit against the guarantors for the same sum.

Orders

  • Appeal dismissed.
  • Hearing of HCCS No.35 of 2009 to proceed and be determined on its own merits.
  • Costs of the appeal and of the court below awarded to the respondent.

Key headnotes

Civil Procedure — Res Judicata — Identity of Parties and Cause of Action
A suit is not barred by res judicata under section 7 of the Civil Procedure Act unless the matter directly and substantially in issue was heard and finally decided in a former suit between the same parties, or those claiming through them, over the same cause of action.
Banking & Finance — Guarantees — Separate Liability of Guarantor and Principal Debtor
The liability of a principal debtor and that of a surety are separate liabilities, although arising out of the same transaction; a judgment establishing the principal debtor's liability does not bar a subsequent suit against the guarantors for the same sum.
Banking & Finance — Guarantees — Creditor's Right to Sue Guarantor Independently
Upon the borrower's default, and absent a specific prohibition in the guarantee contract, a creditor may sue the guarantor independently without first giving notice to the principal borrower, and may join the debtor and guarantors in the same or different actions as best serves the creditor's interests.
Contract Law — Suretyship — Discharge of Guarantor's Liability
A guarantor's liability is discharged only when the principal debtor settles the obligation to the lender; whether the debt has been discharged and whether the guarantors remain liable can only be established by evidence at trial.

Legislation cited (1)

  • Civil Procedure Act s.7

Cases cited (8)

  • Karia and another vs. Attorney General and others, (2005) EA 84
  • Cheborion Barishaki v Attorney General (Constitutional Petition No. 4 of 2006)
  • Omondi vs. National Bank of Kenya Ltd and others [2001] EA 177
  • Njangu v Wambugu (Civil Suit No. 2340 of 1991)
  • Boutique Shazim v Norattam Bhatia (Civil Appeal No. 36 of 2007)
  • Begumisa v Tibegaba (Civil Appeal No. 17 of 2002)
  • Kamunye and Others vs The Pioneer General Assurance Society Ltd [1971] EA 263
  • Semakula vs Magala and Others [1971] HCB 90
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.