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Uganda Devolpment Bank Ltd v Ringa Enterprises Co. Ltd & Anor (Miscellaneous Application No. 188 of 2017)

High Court · [2020] UGCOMMC 13 · 2020 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for review of costs order in judgment following discovery of personal guarantee agreement previously misfiled
Decision
Application allowed. Original costs order in favour of second respondent reviewed and set aside. Execution process halted. Costs of main suit and application awarded to applicant bank against both respondents.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the retrieval of a misfiled personal guarantee agreement after judgment constituted discovery of new and important evidence justifying review under Order 46 Rule 1 of the Civil Procedure Rules. The court reviewed and set aside the costs order in favour of the second respondent, holding that a guarantor under a continuing guarantee agreement is immediately liable upon default of the principal debtor without requiring personal notice of default. Costs of the main suit awarded to the applicant bank against both respondents.

Outcome

Application allowed. Original costs order in favour of second respondent reviewed and set aside. Execution process halted. Costs of main suit and application awarded to applicant bank against both respondents.

Facts

In January 2012, the first respondent company obtained a loan of UGX 700,000,000 from the applicant bank. The second respondent, as managing director, executed a personal guarantee. Following default, the bank filed O.S. Miscellaneous Cause No. 12 of 2015 for recovery by taking possession of mortgaged property, naming both respondents as defendants. The court found in favour of the bank against the first respondent but dismissed the suit against the second respondent as redundant, awarding him costs of UGX 25,000,000. This was because the personal guarantee agreement was not before the court, having been misfiled by a filing clerk. The agreement was retrieved on 28 February 2017 after the bank's records officer conducted searches. The second respondent initiated execution proceedings, including a warrant of arrest against the bank's managing director. The bank filed this application seeking review of the costs order upon discovery of the personal guarantee.

Issues

  1. Whether this is a fit and proper case for review under the law, specifically whether retrieval of a misfiled personal guarantee agreement constitutes discovery of new and important evidence under Order 46 Rule 1 of the Civil Procedure Rules.
  2. Whether the applicant is entitled to the reliefs claimed, including whether the second respondent was entitled to costs in the original judgment.
  3. Whether service of a personal notice of default was required for a guarantor's liability to be triggered under a continuing guarantee agreement.

Orders

  • The order awarding costs to the 2nd Respondent in the judgment and decree dated 19th August 2016 is reviewed and set aside.
  • Costs in the main suit are awarded to the Plaintiff/Applicant against the 2nd Respondent.
  • Both the 1st and 2nd Defendants/Respondents shall pay costs of the suit to the Plaintiff/Applicant.
  • The taxed bill of costs and the process of execution commenced against the Applicant in respect to the impugned award of costs are set aside.
  • The Applicant is awarded the costs of this application against the Respondents.

Rules and key headnotes

Civil Procedure — Review of Judgment — Discovery of New Evidence — Personal Guarantee Agreement Misfiled and Retrieved After Judgment
The retrieval of a personal guarantee agreement that was misfiled and could not be located despite due diligence during the original proceedings constitutes discovery of new and important evidence within the meaning of Order 46 Rule 1 of the Civil Procedure Rules, justifying review of the judgment where that evidence would have led to a different outcome.
Civil Procedure — Review of Judgment — Definition of 'New' Evidence — Document Known to Exist But Not Produced
For purposes of review under Order 46 Rule 1, evidence is 'new' where it was not produced at trial despite due diligence, even if the party knew of its existence. The term 'new' is relative and is determined by contrasting the date of discovery or retrieval with the date when case materials were compiled for trial.
Civil Procedure — Timelines for Filing Affidavits — Order 12 Rule 3 — Application After Disposal of Suit
Where an application arises after disposal of a suit and does not fall within the case management timelines under Order 12 Rule 3 of the Civil Procedure Rules (completion of ADR or scheduling conference), the same general principles governing filing of pleadings apply: an affidavit in reply should be filed within 15 days of service. However, late filing may be excused where good cause is shown, and the court must consider the circumstances of each particular case.
Contract Law — Guarantee — Liability of Guarantor — No Requirement for Personal Notice of Default
Under Section 71 of the Contracts Act 2010 and established common law principles, upon default of the principal debtor, a guarantor is immediately liable to the full extent of their obligation without being entitled to inquire about either a notice of default or previous recourse against co-sureties, apart from special stipulation. No personal notice of default to the guarantor is required for liability to be triggered under a continuing guarantee agreement.
Banking & Finance — Guarantee Agreements — Demand Guarantee — Liability Upon Default
Under a continuing guarantee agreement providing that the guarantor shall pay on demand as if they were the principal obligor, the guarantor's obligations are triggered immediately upon default of the principal debtor without requirement for personal service of notice, and such obligations can only be discharged by performance.

Legislation cited (13)

Cases cited (5)

  • Stop and See (U) Ltd v Tropical Bank Ltd (Miscellaneous Application No. 333 of 2020)
  • Tanitalia Ltd v Mawa Handels Anstal (1957) EA 215
  • Moschi v Lep Air Services Ltd [1973] AC 33
  • Barclays Bank of Uganda Ltd v Sing Hong Guo Dong (Civil Suit No. 35 of 2009)
  • Bank of Uganda v Banco Arabe Espanol CA (Civil Appeal No. 23 of 2000)

Full judgment

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

Uganda Devolpment Bank Ltd v Ringa Enterprises Co. Ltd & Anor (Miscellaneous Application No. 188 of 2017) [2020] UGCommC 13 (28 May 2020)
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.