Wakilii

Barclays Bank of Uganda Ltd v Uchumi Supermarkets Ltd (HCCS 905 of 2016)

High Court · [2018] UGCOMMC 2 · 2018 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 corporate guarantee
Decision
Judgment entered for the Plaintiff for the full sum claimed with interest and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court held that where a defendant obtained an overdraft facility secured by a corporate guarantee and fixed and floating debenture, acknowledged the debt in correspondence, and failed to appear at hearing to rebut the plaintiff's evidence of default, judgment would be entered for recovery of the outstanding sum with interest from the date the guarantee was called.

Outcome

Judgment entered for the Plaintiff for the full sum claimed with interest and costs

Facts

The Defendant applied for and obtained an overdraft facility from the Plaintiff initially for UGX 500,000,000/= on 23 May 2013, secured by a fixed and floating debenture. On 30 July 2014, the facility was varied and increased to UGX 1,000,000,000/=, secured by a corporate guarantee of UGX 1,000,000,000/= and a fixed and floating debenture over all the Defendant's assets. The Defendant accepted the varied terms by endorsement. The Defendant utilized the facility but defaulted in servicing it. The Plaintiff made formal demand on 16 October 2015 and subsequent demands in September and October 2016. In correspondence dated 13 August 2016, the Defendant acknowledged the debt of UGX 710,471,631/= and requested time to settle, citing financial difficulties of its Kenya entity. The Defendant did not appear at the hearing despite being aware of the date.

Issues

  1. Whether the Defendant was indebted to the Plaintiff in the sum of UGX 710,471,631/=.
  2. Whether the Defendant was liable under the corporate guarantee provided as security for the overdraft facility.
  3. Whether the Plaintiff was entitled to interest at the claimed rate.

Orders

  • Judgment entered in favour of the Plaintiff against the Defendant.
  • The Defendant to pay the Plaintiff UGX 710,471,631/=.
  • Interest of 20% from 6th November 2015 being the date the call on the guarantee was made till payment in full.
  • Costs of the suit awarded to the Plaintiff.

Rules and key headnotes

Banking & Finance — Corporate Guarantee — Liability where Guarantor is also the Borrower
Where a corporate entity obtains a banking facility and provides a corporate guarantee over its own indebtedness secured by a debenture over its assets, the entity is liable under both the facility agreement and the guarantee upon default.
Contract Law — Acknowledgment of Debt — Effect of Correspondence Seeking Time to Pay
Where a debtor responds to a demand for payment by acknowledging the sum claimed and requesting time to settle rather than disputing liability, such correspondence constitutes an admission of indebtedness and obliterates any subsequent claim that the debt is not owed.
Evidence — Burden of Proof — Effect of Non-Appearance at Hearing
Where a defendant fails to appear at a hearing despite being aware of the hearing date, the plaintiff's unchallenged evidence stands unrebutted and the court may enter judgment on the strength of that evidence if it satisfies the required standard of proof.
Banking & Finance — Interest — Entitlement from Date of Demand
Interest on a debt recoverable under a guarantee runs from the date the guarantee is called, not from the date of filing suit, where the creditor establishes the date on which formal demand was made.

Full judgment

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

Barclays Bank of Uganda Ltd v Uchumi Supermarkets Ltd (HCCS 905 of 2016) [2018] UGCommC 2 (6 February 2018)
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.