Wakilii

David Ndemeire Baingana and Others v Shared Interest Society Ltd (Civil Suit No. 970 of 2023; Miscellaneous Application No.2085 of 2023)

High Court · [2024] UGCOMMC 412 · 2024 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for leave to appear and defend summary suit arising from loan facility default
Decision
Application for leave to appear and defend dismissed; respondent entitled to proceed to default judgment upon formal proof of amounts due

Observed later treatment

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Holding

The court dismissed the application for leave to appear and defend, holding that the applicants failed to demonstrate any triable issues of fact or law. The court found that the applicants did not deny indebtedness to the respondent for the USD 200,000 loan facility, and their defences regarding COVID-19 impact and interest disparities were not sufficiently particularised or substantiated. The court confirmed it had jurisdiction under Article 139(1) of the Constitution, as the loan was executed and performed in Uganda, notwithstanding the choice of English law clause which permitted enforcement in any court of competent jurisdiction.

Outcome

Application for leave to appear and defend dismissed; respondent entitled to proceed to default judgment upon formal proof of amounts due

Facts

The third applicant, New Bukumbi Coffee Processors Ltd, received a loan facility of USD 200,000 from the respondent comprising USD 100,000 as a term loan for purchasing and installing a wet mill and dryer, and USD 100,000 as a stock trading facility for purchasing raw coffee from farmers. The first and second applicants executed a personal guarantee on 17 September 2018. The loan was to be repaid in three annual instalments starting September 2019, with the credit facility ending on 30 September 2022. The applicants defaulted on repayment and failed to pay even the first instalment due before the COVID-19 pandemic. After the respondent filed a summary suit (Civil Suit No. 970 of 2023), the applicants applied for leave to appear and defend, arguing that the court lacked jurisdiction due to an English law governing clause, that COVID-19 impaired their operations, that interest charges were unconscionable, and that the second applicant had been discharged as guarantor. After filing the application, the applicants paid USD 10,000 towards the debt.

Issues

  1. Whether the application has sufficient grounds to grant leave to appear and defend Civil Suit No. 970 of 2023.
  2. Whether the High Court of Uganda has jurisdiction to hear the matter given that the guarantee deed provides for governance by English law.
  3. Whether the applicants have demonstrated triable issues of fact or law warranting a full trial.

Orders

  • Application dismissed.
  • Costs of the application awarded to the respondent.
  • Costs of the main suit awarded to the respondent.
  • Respondent entitled to default judgment as per Order 36 Rule 5 of the Civil Procedure Rules.
  • Respondent to appear for formal proof to address the court on the actual monies due as of date and the interest rate of 12.75% claimed in the plaint.

Rules and key headnotes

Civil Procedure — Summary Procedure — Leave to Appear and Defend — Test for Granting Leave
Before leave to appear and defend is granted under Order 36 Rule 4 of the Civil Procedure Rules, the defendant must show by affidavit or otherwise that there is a bona fide triable issue of fact or law. The defendant is not bound to show a good defence on the merits but must satisfy the court that there is an issue or question in dispute which ought to be tried.
Civil Procedure — Jurisdiction — Non-Exclusive Jurisdiction Clauses — Effect on Ugandan Courts
Where parties agree in a contract that a matter shall be governed by English law but submit to the non-exclusive jurisdiction of English courts and permit enforcement in any court of competent jurisdiction, Ugandan courts have jurisdiction to hear and determine the matter, particularly where the contract was executed in Uganda, the loan was disbursed to a Ugandan bank account, and performance occurred in Uganda.
Banking & Finance — Loan Default — Acknowledgment of Debt — Payment After Filing of Suit
Where a defendant does not deny receiving a loan facility and makes a payment towards the debt after a suit has been filed, such conduct amounts to an acknowledgment of indebtedness and undermines any claim that there is a triable issue regarding the existence of the debt.
Contract Law — Personal Guarantees — Discharge of Guarantor — Burden of Proof
A guarantor who alleges that he has been discharged from his obligations under a guarantee deed bears the burden of adducing evidence to substantiate the discharge. Mere assertion without supporting evidence is insufficient to raise a triable issue.

Legislation cited (10)

Cases cited (4)

  • M.M.K Engineering v Mantrust Uganda Ltd (Miscellaneous Application No. 128 of 2012)
  • Bhaker Kotecha v Adam Muhammed [2002] 1 EA 112
  • Maluku Interglobal Trade Agency v Bank of Uganda [1985] HCB 65
  • Uganda Revenue Authority v Rabbo Enterprises (U) Ltd and Another (Supreme Court Civil Appeal No. 12 of 2004)

Full judgment

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

David Ndemeire Baingana and Others v Shared Interest Society Ltd (Civil Suit No. 970 of 2023; Miscellaneous Application No.2085 of 2023) [2024] UGCommC 412 (29 April 2024)
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.