Wakilii

Ndalikise Herbert Gyabi and Another v Biashara Trading Co. Ltd (Miscellaneous Application No. 234 of 2017)

High Court · [2017] UGCOMMC 294 · 2017 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for unconditional leave to appear and defend arising from Civil Suit No. 110 of 2017
Decision
Application dismissed; judgment entered against the 1st Applicant

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Application for leave to defend dismissed. Court held that where a borrower admits receiving a loan and fails to demonstrate that payments made relate to the debt in issue, no triable issue arises. Payment of UGX 90,000,000 towards an earlier separate loan agreement dated 20 November 2015 does not constitute payment towards a distinct loan of UGX 230,000,000 advanced under an agreement dated 27 October 2016. The lender exercised its contractual rights to recover the outstanding debt by legal action rather than by selling collateral.

Outcome

Application dismissed; judgment entered against the 1st Applicant

Facts

The 1st applicant borrowed UGX 230,000,000 from the respondent under an individual loan agreement dated 27 October 2016, with the 2nd applicant as guarantor. The applicants defaulted. The respondent filed Civil Suit No. 110 of 2017 seeking recovery. Default judgment was entered against the 2nd applicant. The 1st applicant applied for leave to defend, claiming he had paid UGX 90,000,000 towards the debt and that the respondent held two land titles as security. The respondent contended that the UGX 90,000,000 payment related to an earlier separate loan agreement dated 20 November 2015, not the debt in suit. Documentary evidence showed two distinct loan agreements with different dates and partially different collateral. The earlier loan was secured on land at Najjera which was not pledged for the 2016 loan.

Issues

  1. Whether the applicants should be granted leave to appear and defend Civil Suit No. 110 of 2017.
  2. Whether the applicants raised a bonafide triable issue of fact or law warranting leave to defend.

Orders

  • Application dismissed with costs to the respondent.
  • Leave to appear and defend Civil Suit No. 110 of 2017 refused.
  • Judgment entered against the 1st Applicant with orders as prayed for in the plaint.

Rules and key headnotes

Civil Procedure — Leave to Appear and Defend — Test for Granting Leave
Before leave to appear and defend is granted, the defendant must show by affidavit or otherwise that there is a bonafide triable issue of fact or law.
Contract Law — Loan Agreements — Separate Contracts — Payment Towards Specific Debt
Where a borrower has entered into two separate loan agreements with a lender, payment made towards one loan does not constitute payment towards a distinct loan arising from a separate agreement, even where collateral is similar.
Banking & Finance — Loan Recovery — Lender's Contractual Rights on Default
Upon default by a borrower, a lender may exercise its contractual rights to institute legal action for recovery of the loan and is not bound to first sell collateral held as security, particularly where the agreement grants the lender discretion to choose the method of recovery.

Legislation cited (5)

Cases cited (2)

  • Maluku Inter Global v Bank of Uganda (HCB 65 of 1995)
  • Sembule Investments Ltd v Uganda Baahti Ltd (Miscellaneous Application No. 654 of 2009)

Full judgment

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

Ndalikise Herbert Gyabi and Another v Biashara Trading Co. Ltd (Miscellaneous Application No. 234 of 2017) [2017] UGCommC 294 (26 May 2017)
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.