Wakilii

Luyombya Ahmed Ibrahim and Another v Centenary Rural Development Bank Ltd (Civil Suit 75 of 2025)

High Court · [2025] UGHCCD 228 · 2025 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for unconditional leave to appear and defend a summary suit for recovery of loan debt
Decision
Default judgment entered against the applicants for UGX 174,803,878 with costs to the respondent

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed the applicants' application for leave to defend a summary suit for recovery of a loan debt of UGX 174,803,878. The court held that the applicants' denial of indebtedness was contradicted by their own proposed written statement of defence, which admitted default and pleaded for time to pay. The court found the defence to be a sham and a delaying tactic. The guarantor's argument that he was not served with a demand notice failed because the Mortgage Act provisions cited were inapplicable to a salary loan guarantee. Default judgment was entered for the respondent bank.

Outcome

Default judgment entered against the applicants for UGX 174,803,878 with costs to the respondent

Facts

On 14 March 2024, the respondent bank advanced a salary loan of UGX 230,000,000 to the first applicant. The second applicant executed a guarantee binding himself to repay the loan in case of default. The loan was to be repaid through automatic deductions from the first applicant's monthly salary. The first applicant subsequently lost his employment and stopped making payments. The respondent alleged that the applicants defaulted, leaving an outstanding balance of UGX 174,803,878. The respondent filed a summary suit for recovery. The applicants then applied for unconditional leave to appear and defend, arguing they had a bona fide defence. The applicants denied indebtedness in their supporting affidavit but admitted default and pleaded for time to pay in their proposed written statement of defence.

Issues

  1. Whether the Applicants have raised sufficient grounds to warrant the grant of unconditional leave to appear and defend Civil Suit No. 75 of 2025.
  2. What remedies are available to the parties?

Orders

  • The Application for leave to defend is dismissed.
  • Default judgment is entered for the Respondent in the sum of UGX 174,803,878.
  • Costs of this application are awarded to the Respondent.

Rules and key headnotes

Summary Suits — Leave to Defend — Test for Bona Fide Defence
For unconditional leave to appear and defend a summary suit to be granted, the applicant must show by affidavit that there is a bona fide triable issue of fact or law, and the defence must not be a sham designed to delay the plaintiff from obtaining what is due.
Summary Suits — Contradictory Pleadings — Effect on Application for Leave
Where an applicant's affidavit denies indebtedness but the proposed written statement of defence admits default and pleads for time to pay, the defence is contradictory and amounts to a sham, and leave to defend will be refused.
Guarantee — Liability of Guarantor — Co-extensive with Principal Debtor
Under section 70(1) of the Contracts Act, the liability of a guarantor extends to such extent to which the principal debtor is liable unless otherwise limited by the contract itself.
Salary Loans — Demand Notices — Mortgage Act Inapplicable
The statutory demand notice requirements under section 19 of the Mortgage Act 2009 do not apply to salary loans secured by personal guarantees. Any requirement for a demand notice in such cases is purely contractual and must be found in the terms of the loan agreement or guarantee.
Salary Loans — Loss of Employment — Effect on Repayment Obligation
In salary loans, salary is only proof of creditworthiness. While loss of employment makes repayment onerous, it does not render repayment impossible so as to frustrate the loan agreement or extinguish the obligation to repay.
Breach of Contract — Agreed Interest Rates — No Defence to Recovery
A complaint about an interest rate after having contracted it and enjoyed the loan facility does not amount to a defence to the recovery of the principal debt and the contracted interest.
Summary Suits — Default Judgment — Refusal of Leave to Defend
Where a court declines to grant leave to appear and defend a summary suit, the court shall enter a default judgment against the applicant pursuant to Order 36 rule 5 of the Civil Procedure Rules.

Legislation cited (14)

Cases cited (20)

  • M.M.K Engineering v Mantrust Uganda Ltd (Miscellaneous Application No. 128 of 2012)
  • Bhaker Kotecha v Adam Muhammed [2002] 1 EA 112
  • Sadolin Paint v Wali Mohammed (1972) EA 395
  • Makulu Interglobal Trade Agency Ltd v Bank of Uganda (1985) HCB 65
  • Anita Among v Ndagiro Innocent (Miscellaneous Application No. 972 of 2023)
  • Mako Hardware Co Ltd v Total Uganda Ltd (Miscellaneous Application No. 1031 of 2021)
  • Hasmani v Banque du Congo Belge (1958) 5 EACA 88
  • Kasozi v DFCU Bank Ltd (Civil Suit No. 1326 of 2000)
  • Namukasa Sarah Nsamba v Letshego Uganda Limited (Miscellaneous Application No. 590 of 2018)
  • Yako Microfinance Ltd v Boaz Kafuza & 2 Others (Civil Suit No. 228 of 2016)
  • Peter Bakaluba Mukasa v Betty Nambooze (Election Petition Appeal No. 4 of 2009)
  • Home and Overseas Company Ltd v Mentor Insurance Co (UK) Ltd (1989) 3 All ER 74
  • Republic Motors Ltd v Atlantic Decorations (1982) HCB 104
  • Agony Swaibu v Swalesco Motor Spare and Decoration Dealers (Civil Appeal No. 48 of 2014)
  • Standard Chartered Bank (U) Ltd v Bob Ssekamatte Nsereko (Civil Suit No. 873 of 2020)
  • Zola & Another v Ralli Brothers Ltd & Another [1969] EA 691
  • Olet Charles Dickens v Centenary Rural Development Bank Limited (Miscellaneous Application No. 1820 of 2021)
  • Imperial Bank (U) Ltd v Kaika Investco Ltd & 2 others
  • Ronald Kasibante v Shell Uganda Limited (Civil Suit No. 542 of 2006)
  • Uganda Development Bank v Muganga Construction Co Ltd (1981) HCB 35

Full judgment

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

Luyombya Ahmed Ibrahim and Another v Centenary Rural Development Bank Ltd (Civil Suit 75 of 2025) [2025] UGHCCD 228 (16 December 2025)
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.