Wakilii

Paul Kasagga and Anor v Barclays Bank (U) Ltd (HCT-00-CC-MA 113 of 2008)

High Court · [2008] UGCOMMC 42 · 2008 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 brought under Order 36 rule 4, Order 52 rule 1 of the Civil Procedure Rules and section 98 of the Civil Procedure Act
Decision
Application dismissed but enforcement against guarantors stayed pending determination of principal debtor's liability

Observed later treatment

Cited — treatment unverified cited in 2 (treatment unverified) Sequitur — Uganda’s citator · Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

No adverse treatment recorded Cited 2 times with no adverse treatment recorded; not yet tested on the merits. Derived from citing cases in the Wakilii corpus — a deterministic signal, not legal advice.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

Application for leave to defend dismissed where guarantors failed to raise a bonafide triable issue. The court held that personal guarantees executed for overdraft facilities in 2005 remained valid continuing security for a restructured loan in 2007. Demand was properly served. However, the court stayed enforcement against the guarantors pending determination of the principal debtor's liability in the main suit, recognising that a guarantor's obligation is co-extensive with and accessory to the principal debtor's obligation.

Outcome

Application dismissed but enforcement against guarantors stayed pending determination of principal debtor's liability

Facts

Barclays Bank sued to recover UGX 2,211,653,283 from M/s Zzimwe Enterprises Hardware & Construction Ltd and the applicants as guarantors. Between May 2005 and May 2006, Zzimwe obtained three overdraft facilities from Nile Bank totalling UGX 1,600,000,000, secured by personal guarantees executed by the applicants as company directors. Zzimwe defaulted and at its request Nile Bank restructured the debt into a loan in January 2007. Barclays acquired Nile Bank in 2007 and made demand on the guarantors in November 2007. The applicants sought leave to defend, arguing the guarantees were unrelated to the claim and unenforceable. In a related application, the principal debtor Zzimwe had been granted leave to contest the amount owing.

Issues

  1. Whether the applicants demonstrated a bonafide triable issue to warrant unconditional leave to appear and defend.
  2. Whether the guarantee deeds executed in 2005 relating to overdraft facilities remained enforceable security for a loan agreement executed in 2007.
  3. Whether demand had been made upon the guarantors in respect of the guarantees.
  4. Whether guarantors should be permitted to defend when the principal debtor's indebtedness remains undetermined.

Orders

  • The Applicants' application to appear and defend Civil Suit No 51 of 2008 is dismissed.
  • The Respondent is not to exercise its rights to recover from the Applicants, as guarantors, until the 1st Defendant's indebtedness is determined in Civil Suit No. 51 of 2008.
  • Each party shall bear its own costs.

Rules and key headnotes

Civil Procedure — Summary Procedure — Leave to Defend — Test for Granting Leave
On an application for leave to defend a summary suit, the applicant must show by affidavit or otherwise that there is a bonafide triable issue of fact or law. Any defence raised must be stated with sufficient particulars to appear genuine and not merely vague denials of liability.
Evidence — Affidavit Evidence — Uncontroverted Averments
Where facts are sworn to in an affidavit and are not denied or rebutted by the opposite party, the presumption is that such facts are accepted.
Banking & Finance — Guarantees — Continuing Security — Restructured Facilities
Where a guarantee deed provides that it shall be a continuing security, and overdraft facilities secured by personal guarantees are restructured into a loan facility which expressly provides that it is in addition to other agreements and lists personal guarantees as held security, the original guarantees remain enforceable for the restructured loan.
Contract Law — Guarantees — Nature and Extent of Guarantor's Liability
A guarantee is a contract whereby a person contracts with another to pay a debt of a third party who remains primarily liable. The guarantor's liability is co-extensive with the principal debtor's obligation. If the principal debtor's obligation does not exist, is void, diminished or discharged, so is the guarantor's obligation in respect of it.
Banking & Finance — Guarantees — Secondary and Accessory Nature
A guarantee obligation is secondary and accessory to the obligation the performance of which is guaranteed. The guarantor undertakes that the principal debtor will perform his obligation and that the guarantor will be liable if the principal debtor does not perform. Where the principal debtor's indebtedness remains undetermined, the guarantor's liability likewise remains undetermined.
Civil Procedure — Inherent Jurisdiction — Orders to Prevent Abuse and Secure Justice
Under section 98 of the Civil Procedure Act, the court has unlimited inherent power to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of court, including staying enforcement against guarantors pending determination of the principal debtor's liability.

Legislation cited (4)

Cases cited (4)

  • Muluku Interglobal Trade Agencies v Bank of Uganda (1985) HCB 65
  • Tororo District Administration v Andalap Industries (1997) IV KALR 126
  • Massa v Achieng (1978) HCB 297
  • Abubakar Kato Kasule v Tomson Muhwezi (1992-1997) HCB 212

Cases citing this judgment (2)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

Full judgment

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

Paul Kasagga and Anor v Barclays Bank (U) Ltd (HCT-00-CC-MA 113 of 2008) [2008] UGCommC 42 (21 August 2008)
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.