Wakilii

Allied Bank International (U) Limited v Jemba (Civil Suit 989 of 1999)

High Court · [2007] UGHC 45 · 2007 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of debt under a personal guarantee
Decision
Defendant held liable as guarantor for the full amount of the unpaid debt

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that a guarantor remains liable where the principal debtor's debt remains unpaid. The defendant argued that receiver managers appointed by the plaintiff had taken control of stock worth UGX 138,095,000 and that the debt should be discharged from those proceeds. The court found on the evidence that the receiver managers never sold any stock and never brought any money to the bank, as the warehouse was found empty when eventually opened. The burden of proof lay on the defendant to show payment, which he failed to discharge. Judgment entered for the plaintiff for the principal sum plus interest.

Outcome

Defendant held liable as guarantor for the full amount of the unpaid debt

Facts

The plaintiff bank advanced credit facilities to Permex International (U) Ltd. The defendant, as Managing Director of Permex, executed a personal guarantee. When Permex defaulted, the plaintiff appointed receiver managers who took control of company stock valued at UGX 138,095,000 located at the defendant's premises in Kireka. An interim injunction initially restrained the receivers from selling the stock. After dismissal of the injunction application on 30 August 1999, the receivers attempted to retake control but faced non-cooperation from the defendant's family. When they eventually gained access by cutting locks, the warehouse was found empty. The original locks had been changed. Bank statements showed the debt stood at UGX 34,019,926 as at 30 July 1999. The plaintiff sued on the guarantee. The defendant contended he was discharged because the receivers had control of valuable stock which should have satisfied the debt.

Issues

  1. Whether the debt was paid and the defendant is thereby discharged of his obligation as a guarantor.
  2. What remedies are available to the plaintiff.

Orders

  • Judgment entered in favour of the plaintiff for UGX 34,019,926.
  • Interest thereon from the date of filing till payment in full.
  • Costs awarded to the plaintiff.

Rules and key headnotes

Banking & Finance — Personal Guarantees — Discharge of Guarantor — Burden of Proof
A guarantor who contends that the principal debt has been paid bears the burden of proving payment and his discharge from liability under the guarantee.
Contract Law — Personal Guarantees — Liability of Guarantor — Control of Security by Creditor
A guarantor does not escape liability merely because a creditor's receiver managers obtained control of the principal debtor's assets, where those assets were never sold and no proceeds were realised to reduce the debt.
Evidence — Burden of Proof — Proof of Payment — Evidence Act s.102
Under section 102 of the Evidence Act, the burden of proof lies on the person who wishes the court to believe in the existence of a fact, unless any law provides that proof of that fact shall lie on any particular person. Where a defendant asserts payment of a debt, the burden lies on the defendant to prove that payment.
Civil Procedure — Pleadings — Parties Bound by Pleadings — Departure from Pleadings
Parties are bound by their pleadings. Where a party's pleadings admit that receiver managers had control and possession of assets but could dispose of them, the party cannot later depart from those pleadings by asserting without evidence that the receivers actually sold the assets.

Legislation cited (1)

Full judgment

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

Allied Bank International (U) Limited v Jemba (Civil Suit 989 of 1999) [2007] UGHC 45 (14 December 2007)
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.