Wakilii

Paul Kasagga & Anor v Barclays Bank (U) Ltd (HCT-00-CC-MA 112 of 2009)

High Court · [2009] UGCOMMC 30 · 2009 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for review of order refusing leave to defend arising from summary suit for recovery of debt
Decision
Applicants granted leave to defend the main suit and ordered to file Written Statement of Defence within fourteen days

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that it was an error apparent on the record to refuse the applicants leave to defend without considering their liability as guarantors. A guarantor's obligation is secondary and accessory to the principal debtor's obligation. Where the extent of the principal debtor's liability is in dispute and subject to court determination, the guarantors' liability cannot be prejudged. Application for review allowed.

Outcome

Applicants granted leave to defend the main suit and ordered to file Written Statement of Defence within fourteen days

Facts

The respondent bank filed a summary suit seeking to recover Shs 2,211,653,283/05 from M/s Zzimwe Hardware and Construction Enterprises Ltd and the applicants as guarantors to an overdraft facility. The principal debtor disputed the amount claimed, contending only Shs 663,182,701/= was due, and was granted leave to defend for the court to determine the amount actually due. The applicants, sued as guarantors, applied for leave to defend on grounds that they owed nothing, the guarantee documents were not enforceable, and there had been no demand. The court refused their application and dismissed it, finding the guarantee documents related to the claim and appropriate demand had been made. The applicants then applied for review of that order.

Issues

  1. Whether the court order refusing the applicants leave to defend should be reviewed on the ground that there was an error apparent on the face of the record.
  2. Whether the applicants' liability as guarantors was subject to the determination of the principal debtor's liability in the main suit.

Orders

  • Application for review succeeds.
  • Order refusing leave to defend is reviewed.
  • Applicants are allowed to appear and defend Civil Suit No. 51 of 2008.
  • Applicants must file a Written Statement of Defence within fourteen days from the date of this ruling.
  • Costs shall be in the course of the main suit.

Rules and key headnotes

Civil Procedure — Review of Judgment — Error Apparent on Face of Record — Test
An error apparent on the face of the record is a substantial error of law that stares one in the face and on which there could reasonably be no two opinions. An error which has to be established by a long drawn process of reasoning or on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. Where a view adopted by the court is a possible one, it cannot be an error apparent even though another view was also possible.
Contract Law — Guarantee — Nature of Guarantor's Obligation — Secondary and Accessory
A guarantee obligation is secondary and accessory to the obligation the performance of which is guaranteed. The guarantor's liability is coexistent with the principal debtor's obligation. If the principal debtor's obligation turns out not to exist or is void or dismissed or discharged, so is the guarantor's obligation in respect thereof.
Banking & Finance — Guarantee — Extent of Guarantor's Liability — Dependent on Principal Debtor's Default
The liability of a guarantor arises only upon the default of the principal debtor and is limited to the extent of the default. Where the extent of default and liability of the principal debtor is in issue and subject to determination by the court, the guarantor's liability cannot be prejudged and the guarantor must be allowed to defend to ascertain the extent of their liability.

Legislation cited (5)

Cases cited (1)

  • Nyamongo and Nyamongo Advocates v Kogo (2001) EA 173

Full judgment

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

Paul Kasagga & Anor v Barclays Bank (U) Ltd (HCT-00-CC-MA 112 of 2009) [2009] UGCommC 30 (15 June 2009)
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.