Wakilii

Tamusange & Anor v Exim Bank (U) Ltd (Miscellaneous Application No. 1213 of 2016)

High Court · [2017] UGCOMMC 142 · 2017 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for leave to appear and defend arising from summary suit for recovery of debt as guarantors
Decision
Applicants granted unconditional leave to file defence and proceed to full hearing

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the applicants demonstrated a plausible defence and raised triable issues of law by showing that the debt claimed may have been settled when the receiver released two vehicles to the respondent bank and by questioning the manner of sale of those vehicles. The requirement under Order 36 Rule 4 CPR is satisfied when an applicant shows a bonafide triable issue of fact or law, not a defence good on the merits. Application for leave to appear and defend granted.

Outcome

Applicants granted unconditional leave to file defence and proceed to full hearing

Facts

African Minerals Limited borrowed UGX 403,546,430 from Exim Bank (Uganda) Ltd. The company was placed under receivership and then liquidation. The respondent bank lodged its claim with the receiver, who released two vehicles (Crane Reg No. UAS 602S and Mercedes Benz Tipper Reg No. UAS 222D) as security for the facility. The vehicles were sold for UGX 172,000,000, allegedly leaving an outstanding sum of UGX 358,005,135. The respondent bank filed a summary suit against the applicants as guarantors of the company, claiming the outstanding balance. The applicants contended that the receiver's release of the vehicles constituted final settlement of the entire debt and that the bank failed to provide proper accountability for the sale of the vehicles.

Issues

  1. Whether the application raises triable issues to warrant the grant of leave to appear and defend the main suit.
  2. What remedies are available to the parties.

Orders

  • Application allowed.
  • Applicants granted leave to appear and defend the suit.
  • Applicants to file a defence to the suit within 10 days of the ruling.
  • Costs in cause.

Rules and key headnotes

Summary Procedure — Leave to Defend — Test for Granting Leave
For leave to appear and defend to be granted in a summary suit, the defendant must show by affidavit or otherwise that there is a bonafide triable issue of fact or law. The defendant is not bound to show a good defence on the merits but must satisfy the court that there is an issue or question in dispute which ought to be tried.
Summary Procedure — Leave to Defend — Investigation of Allegations
Leave to appear and defend will not be given merely because there are several allegations of fact or law made in the defendant's affidavit. The court investigates the allegations to decide whether leave should be given, and even if a single defence is identified or found to be bonafide, unconditional leave should be granted.
Summary Procedure — Leave to Defend — Requirement to Annex Draft Defence
In applications for leave to appear and defend in summary suits, the defence and triable issues must not only be disclosed but the intended written statement of defence should be annexed to the application as it helps the judge determine whether to refuse or grant the application.
Guarantee — Defences Available to Guarantors — Settlement by Principal Debtor
Where a guarantor asserts that the principal debtor's obligation was settled through the receiver's release of security, and questions remain as to the proper sale and accounting of that security, such assertions raise triable issues of law that cannot be determined summarily and warrant the grant of leave to defend.

Legislation cited (5)

  • Civil Procedure Act s.98
  • Civil Procedure Rules O.36 r.3
  • Civil Procedure Rules O.36 r.4
  • Civil Procedure Rules O.52 r.1
  • Civil Procedure Rules O.52 r.2

Cases cited (5)

  • Makula Interglobal Trade Agency v Bank of Uganda [1985] HCB 65
  • Kabagenyi Teddy Onyango v Fina Bank (U) Ltd (High Court Civil Suit No. 70 of 2012)
  • Bunjo v KCB (Uganda) Ltd (Miscellaneous Application No. 174 of 2014)
  • Corporate Insurance Co. Ltd v Nyali Beach Hotel Ltd [1995-1998] EA 7
  • Uganda Commercial Bank v Mukoome Agencies [1982] HCB 22

Full judgment

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

Tamusange & Anor v Exim Bank (U) Ltd (Miscellaneous Application No. 1213 of 2016) [2017] UGCommC 142 (14 August 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.