Wakilii

Uganda Development Bank v Begumisa & 3 Ors (HCT-00-CC-CS 171 of 2008)

High Court · [2013] UGCOMMC 90 · 2013 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 guarantee deeds, heard ex parte after defendants failed to appear despite substituted service
Decision
Judgment entered against all Defendants jointly and severally for the principal amounts, interest and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that guarantors who executed guarantee deeds are jointly and severally liable for debts of the principal borrower upon default. The Defendants' guarantees made them primary obligors for loans totalling USD 200,000 and UGX 920,000,000 advanced to Begumisa Enterprises Ltd. The court found the Defendants willfully executed the guarantee deeds and failed to honour demands for payment following the principal borrower's default. Judgment awarded ex parte for USD 60,872 and UGX 952,894,486 plus interest and costs.

Outcome

Judgment entered against all Defendants jointly and severally for the principal amounts, interest and costs

Facts

Uganda Development Bank Ltd extended loan facilities of USD 200,000 (July 2005) and UGX 920,000,000 (September 2006) to Begumisa Enterprises Ltd. The four Defendants, who were shareholders and directors of the principal borrower, executed guarantee deeds dated 4 July 2005 and 18 September 2006 as security for repayment. The principal borrower defaulted on repayment and was later placed under receivership. The Plaintiff made demands on both the principal borrower and the guarantors without success. The Defendants' defences included claims of non-execution, lack of understanding, absence of legal advice, and undue influence, but they failed to appear at the hearing despite substituted service via newspaper publication.

Issues

  1. Whether the Plaintiff is entitled to recover the sums due and owing from Begumisa Enterprises Ltd (Principal Borrower) from the Defendants jointly and severally
  2. Whether the Plaintiff is entitled to remedies sought

Orders

  • Judgment entered against the Defendants jointly and severally for USD 60,872.00 and UGX 952,894,486/=.
  • Interest awarded at 24% per annum on the Uganda shilling component from the date of filing the suit until payment in full.
  • Interest awarded at 11% per annum on the United States dollar component from the date of filing the suit until payment in full.
  • Costs of the suit awarded to the Plaintiff.

Rules and key headnotes

Guarantee — Liability of guarantor as primary obligor upon default of principal debtor
Where a guarantee deed provides that guarantors undertake liability as primary obligors and not merely as sureties, the guarantor becomes immediately liable upon default of the principal debtor to the full extent of the obligation, without being entitled to require either notice of default or previous recourse against the principal.
Guarantee — Joint and several liability under guarantee deed
Where a guarantee deed expressly provides that the obligations of guarantors are joint and several, a creditor may join all or any of the guarantors as defendants and recover the entire debt from them jointly and severally.
Guarantee — Burden of proof for defences of non-execution, undue influence and lack of understanding
Where guarantors plead defences of non-execution of guarantee instruments, undue influence, or lack of understanding of the contents without legal advice, but fail to adduce evidence in support of those defences, the court will find that the guarantors willfully executed the guarantee deeds and are bound by their terms.

Cases cited (2)

  • Bank of Uganda v Bano Arabe Espanol (Civil Appeal No. 23 of 2003)
  • [1973] AC 331

Full judgment

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

Uganda Development Bank v Begumisa & 3 Ors (HCT-00-CC-CS 171 of 2008) [2013] UGCommC 90 (13 May 2013)
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.