Wakilii

Stanbic Bank Uganda Limited v Cyan Uganda Ltd and Others (Civil Suit No. 622 of 2018)

High Court · [2022] UGHC 261 · 2022 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of debt under banking facilities and personal guarantees, proceeding ex parte against 2nd and 3rd Defendants after 1st Defendant entered liquidation
Decision
Judgment entered against 2nd and 3rd Defendants jointly and severally for the debt amounts plus contractual interest and costs

Observed later treatment

Cited — treatment unverified cited in 1 (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 1 time 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

The court held that personal guarantors of banking facilities are liable under demand guarantees upon default by the principal debtor. Under section 71 of the Contracts Act 2010, a guarantor's liability takes effect upon default by the principal debtor and extends to the full extent of the principal's liability unless otherwise provided. The 2nd and 3rd Defendants, having signed personal guarantees securing the 1st Defendant's facilities, became liable when the 1st Defendant defaulted and failed to respond to demands for payment.

Outcome

Judgment entered against 2nd and 3rd Defendants jointly and severally for the debt amounts plus contractual interest and costs

Facts

The Plaintiff bank advanced five facilities to the 1st Defendant between December 2016 and September 2017: a business loan of UGX 145,000,000, an overdraft of UGX 55,000,000, a tax loan of UGX 30,000,000, an import loan of US$ 122,000, and a business term loan of UGX 122,216,605. Interest rates were 11.75% on USD facilities and 18% on UGX facilities. The facilities were secured by personal guarantees executed by the 2nd and 3rd Defendants. The 1st Defendant defaulted on repayment. The Plaintiff issued demand letters on 24th November 2017 and 26th March 2018 to the principal debtor and guarantors. No payments were made. As of 16th July 2018, the debt stood at US$ 80,293.38 and UGX 490,978,932. The 1st Defendant entered liquidation proceedings and the suit against it was stayed. The Plaintiff proceeded ex parte against the 2nd and 3rd Defendants after they failed to respond to a substituted service hearing notice.

Issues

  1. Whether the 2nd and 3rd Defendants are liable for payment of the 1st Defendant's debt.
  2. What remedies are available to the Plaintiff.

Orders

  • The 2nd and 3rd Defendants jointly and severally pay the Plaintiff US$ 80,293.38.
  • The 2nd and 3rd Defendants jointly and severally pay the Plaintiff Ugx. 490,978,932/=.
  • The 2nd and 3rd Defendants pay interest on the USD sum at 11.75% per annum from 16th July 2018 until payment in full.
  • The 2nd and 3rd Defendants pay interest on the UGX sum at 18% per annum from 16th July 2018 until payment in full.
  • The 2nd and 3rd Defendants pay the Plaintiff's taxed costs of the suit.

Rules and key headnotes

Banking & Finance — Demand Guarantees — Characteristics and Liability
A demand guarantee creates primary liability for the guarantor, distinct from secondary liability under a contract of suretyship. The guarantor's obligations are autonomous and not affected by disputes under the underlying contract between the beneficiary and the principal debtor. Upon an honest demand by the beneficiary, the guarantor must honour the demand regardless of whether the beneficiary is entitled to payment as between itself and the principal.
Contract Law — Guarantees — Liability of Guarantor under Contracts Act
Under section 71 of the Contracts Act 2010, the liability of a guarantor extends to the same extent as the principal debtor unless otherwise provided by contract, and the guarantor's liability takes effect upon default by the principal debtor.
Civil Procedure — Burden of Proof — Ex Parte Proceedings
The burden of proving a case on the balance of probabilities remains on the plaintiff even where the matter proceeds ex parte. The fact that a defendant does not appear does not relieve the plaintiff of the duty to establish its case to the required standard.

Legislation cited (1)

Cases cited (4)

  • Ebbzworld Limited and Another v Tonny Rutakinva (Civil Suit No. 398 of 2013)
  • Nsubuga v Katruma [1978] HCB 307
  • Yoswa Kityo v Eriya Kaddu [1982] HCB 58
  • Comdel Commodities Ltd. Vs Siporex Trade SA

Cases citing this judgment (1)

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.

Stanbic Bank Uganda Limited v Cyan Uganda Ltd and Others (Civil Suit No. 622 of 2018) [2022] UGHC 261 (14 February 2022)
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.