Wakilii

Nsamo v Equity Bank (U) Ltd (Miscellaneous Application No. 936 of 2016)

High Court · [2017] UGCOMMC 246 · 2017 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside default judgment entered in summary suit for liquidated claim
Decision
Default judgment in Civil Suit No. 190 of 2014 remains in place; applicant's application to set it aside refused

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that substituted service ordered by court and effected through newspaper publication is as effectual as personal service. An application to set aside a default judgment on grounds of ineffective service will be dismissed where court had granted substituted service and the defendant had actual knowledge of the proceedings through his lawyers' response. The applicant's defence of frustration was not available where alleged loss of security occurred after breach of the loan contract and after the suit had been filed.

Outcome

Default judgment in Civil Suit No. 190 of 2014 remains in place; applicant's application to set it aside refused

Facts

The parties entered into a credit facility agreement dated 27 April 2012 whereby the respondent bank advanced the applicant UGX 90,000,000 for purchase of a truck. The applicant pledged two motor vehicles as security. He defaulted on monthly repayments and the respondent filed Civil Suit No. 190 of 2014 for recovery of UGX 77,468,000. The respondent was unable to effect personal service and obtained a court order for substituted service through newspaper publication on 18 June 2014. The applicant instructed lawyers (Ssetimba & Co. Advocates and Mugenyi & Co. Advocates) who filed a notice of joint instructions on 21 August 2014 and proposed settlement, but failed to file an application for leave to appear and defend within the prescribed time. Default judgment was entered on 17 November 2014. The applicant later sought to set aside the judgment, claiming he was never served and arguing that the contract was frustrated when one vehicle disappeared on 1 May 2014 and another was involved in an accident on 8 May 2014. Both alleged losses occurred after the suit was filed on 19 March 2014.

Issues

  1. Whether there was effective service of summons in a summary suit upon the applicant.
  2. Whether the applicant has a plausible defense to warrant grant of unconditional leave to appear and defend.

Orders

  • Application dismissed.
  • Costs awarded to the respondent.

Rules and key headnotes

Service of Process — Substituted Service — Effect
Substituted service ordered by court and effected in accordance with the court order is as effectual as if service had been made on the defendant personally.
Setting Aside Default Judgment — Effective Service
Where a defendant's lawyers filed a notice of joint instructions and made settlement proposals in response to substituted service, the defendant cannot later argue that substituted service did not attain its intended objective or that he had no knowledge of the suit.
Frustration — Loss of Security After Breach
The doctrine of frustration is not available as a defence where the alleged supervening event (loss of security) occurred after the defendant was already in breach of the contract and after the creditor had instituted proceedings for recovery of the outstanding debt.
Loan Security — Availability for Frustration Defence
Vehicles pledged as security for a loan are not essential to performance of the loan repayment obligation but are mere securities to be resorted to by the lender in the event of default. Loss of such security does not frustrate the borrower's obligation to repay the loan directly from the borrower's account in accordance with the agreed repayment schedule.

Legislation cited (5)

Cases cited (5)

  • Proline Soccer Academy Ltd v Lawrence Mulindwa & 50 Others (High Court Civil Suit No. 459 of 2009)
  • Franco Mugumya v Total (U) Ltd (Miscellaneous Application No. 28 of 2013)
  • East Mengo Growers Cooperative Union Ltd v The Registrar of Titles (Miscellaneous Application No. 48 of 2009)
  • Vincent Mukasa v Nile Safaris Ltd (Civil Appeal No. 50 of 1997)
  • Denny Mott & Dickson v James B. Fraser & Co [1944] AC 265

Full judgment

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

Nsamo v Equity Bank (U) Ltd (Miscellaneous Application No. 936 of 2016) [2017] UGCommC 246 (9 November 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.