Abdul Karim and Another v Barclays Bank of Uganda Limited (Civil Suit 348 of 80) [1993] UGHC 38 (21 December 1993)

Full Case Text

### THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UCAMDA AT KAMPALA

## CIVIL SUIT NO.3'8/80

ABDUL KARIM ABDULIAH :::::::::::::::::::::::::::: APPLICANT/DEL ð HUSSEIN ABDULLAN

### VERSUS

BARCLAYS BANK OF UGANDA LTD. 23::::::::::::::::::::: RESP-/PLAINTIF BEFORE: THE HONOURABLE MR, JUSTICE F. M. S. EGONDA-NTENDE RULING:

The Applicant, Abdul Karim Abdullah, has applied to this court seeking to set aside the decree in the original suit dated the 6th July 1981 and that leave be granted to the Applicant to appear and defend the suit. He also seeks provision for the costs presumable incurred on account of this application. The application is brought under Order 33 rule 11 and Order 48 rule 1 of the Civil Procedure Rules. It is supported by an affidavit sworn by the Applicant. The Respondents who are the Plaintiffs and Decree holders opposed this application and filed an affidavit in reply.

The Applicant relies on 2 grounds which are:-

(a) That service of summons was not effective.

(b) There is good cause to set aside the Decree.

Mr. Byenkya, learned counsel for the Applicant submitted that there was no effective service upon the Applicant. This is so because at the time an order for substituted service was made, the Applicant was in exile in the Republic of Sudan. He returned to Uganda only in 1989 yet substituted service was ordered and a direction made that the summons be published in Uganda Newspapers. This, Mr. Byenkya argued, could not amount to effective service. Facts have now emerged that were unknown to the court at the time an order for substituted service was made which render such service ineffective.

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**Secondlyt Mr. Byenkya. argued that there \*was good cause for this** i • • t **Decree** to be set aside? He referred to the case of Caltex Oil (U) Ltd® versus Kyobe /"I988/90 7 HoCoBc M in which !'good cause" was consider-'1 **Under** this head, Mr, Byenkya argued that under clause 1 & 20 of the guarantee? liability for the Applicant could only arise after demand in wrf.t5.ng had been made but the Applicant had never recieved such a demand in writing and therefore there was a triable issue as to whether liability had arisen\* He dismissed Mr. Kateera's affidavit in reply on this point as failing to prove that demand was actually made®

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Mr® Byenkya also argued, that this contract o.f guarantee was frustrated by the fact that the Applicant was in exile and could nob therefore be in a position to perform the contract. This, he claimed, amounted to a triable issue which ought to go to trial. Furthermore; Mr Byenkya argued that the contract of guarantee covered only shs® 2^0 3 000/.-= but what was sought to be recovered was shso 2519856/80 plus interest® The Decree therefore ought to be set **aside\***

•Mr© Byenkya contended that the Respondent will suffer no f prejudice as he has already been paid his' money® At the same time there was a further point of law as to whether an action can be • maintained against both the principal and the gurantor. Mr. Byenkya submitted that no such action can lie but he was unable to provide **any** authority for this proposition\* He prayed that the **Decree** be set. aside,,

Mr® Buyondo of Mugerwa & Matovu opposed this application. He submitted 'that there was no question of ineffective service. Substituted service was effective service. He submitted that demand was made in writing and posted to the Applicants in accordance with **the** contract of guarantee\*

Mr. Buyendo submitted that clause 2 of the contract allowed the Respondent to recover interest and other expenses. He stated that the claim against the Applicant was properly set out. No good cause had been made out by the Applicant for setting aside the Decree. The Decree was executed as far back as 1984. This application, he prayed, should be dismissed with cosks.

From the available information on this file which appears to be the second duplicate file, the Respondent filed an action against Hussein Abdullah and the Applicant as Defendant No.2 on the 10/6/80. The Plaint states in part as under:~

- "5. The first Defendant in Indebted to the Plaintiff in the sum of shs. 251,856/80 plus interest calculated as at 22nd November 1979. - 6. By arrangement with an agreement in writing dated 25th May 1978 between the Plaintiff and the second Defendant, the second defendant agreed for the consideration therein set out to guarantee the payment or demand of all advances including interest and bank charges thereon a copy of the guarantee is annexed hereto and marked "A". - 7. It is an express term of the said agreement that the said second Defendant should not be liable for an amount exceeding shs. 240,000/= in all. - $8.$ ............................. - 9. The Plaintiff has demanded payment of the said sum but the Defendants have neither paid the same or any interest thereof."

The portion of the Plaint setting out the prayer read:-

"Wherefore; the Plaintiff claims against the Defendants jointly or severely

- (a) shs. $251,856/80$ - (b) interest thereon at 12% P. A. compounded with monthly rests from 15th November 1979 till payment in full.

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$00000/4$

# (c) Costs•"

**The** Respondents applied for substituted service on both Defendants which was granted. Publication of the summons in summary suit was made in the Uganda Times and Munno Newspapers\* No appearance was entered. A Decree in default was entered against both Defendants\* Subsquently? execution was levied against the 2na Defendants property **a** house at Ntinda to recover a sum definitely in excess of shs\*240,000/x From the reconstituted records on the file it is not clear as to how much money was realised at the sale. From the evidence adduced by both parties hereto, I am not able to ascertain what was realised from the execution.

I have carefully considered the submission of counsel **in thl\$ patter.** It has not been suggested that at the time the order of substituted service was made the Respondent had knowledge that the Applicant was outside jurisdiction\* The Applicant himself did not inform the Respondent of his changed address which I imagine was possible. There were good grounds at the time to make an order for substituted service. The Applicant could not be traced and on his own admission could not have been traced at his last known **address** as he was not there. No information as to his whereabouts was made available to those he had entered into business or commercial dealings with. In my opinion, he had an obligation whether **in exile or** not to inform the Respondents that he had changed **his address\*** Having not done that, he can not fault them when they **proceeded on the** basis that he could not be traced. I therefore **find that** substituted service in the circumstances was not **ineffective as argued** by counsel for the Applicant. **Service was at the time effective and it** therefore holds.

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#### "GOOD CAUSE"

It has been argued for the Applicant that there was good cause for setting aside the Decree and granting leave to the Applicant to appear and defend the suit. The Applicant depones in para 12 that no demand in writing was made as required under clause 1 of the contract.

> That I would have hal a good defence as my $1112.$ liability under the contract (clause 1) would only arise if demand was made in writing to me personally by the Bank and this was never done nor was it even alleged in the affidavit in support of the suit that domain had been so made to me."

In the Plaint, it was stated in paragraph 9 as follows:-

The Plaintiff has demanded payment of the said $119a$ sum but the Defendants have neither paid the same nor any interest thereof."

The relief Manager of the Respondent who swore the accompanying affidavit interalia, stated in paragraph 2 as under:-

> "..................................... appear in the plaint in this action.

and in effect depend to the notice of demand that was referred to in paragraph 9 of the Plaint.

Counsel for the Applicant dwelt at length on the allegation that no demand notice in writing was made upon the Applicant and that therefore no liability arose for as long as no demand had been The only evidence to support this allegation is the Applicant made. deposing so. However, counsel for the Applicant submitted that the Respondent had not adduced any evidence to show that he had made the demand notice in writing upon the Applicant. At this stage the burden of proof was not upon the Respondent but the Applicant who was asserting a certain set of facts to be the case. It is not enough

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**for the** Applicant just to allege in **his affidavit that no demand in writing** was made by the Respondents\* Although that **which** is **now** certain is that the Applicant was not in Uganda and thus could not have recieved this notice9 After all he could not be traced#

The Plaint asserts that demand was made up;>n both Defendants# **Mr®** Kateera in his affidavit in re; ? y hns attached a copy of the demand in writing made by the Respondents dated 2?th December 1979 under a certificate of posting addressed to the Applicant P. O# Box 161P Kampala0 I am satisfied that demand in writing was made to the Applicant# This ground on that sccro cannot succeed. It may be true that he did not recieve the Notice<> In any case he was not **in** the country at the time, by his own admission, and be seems not **to** have assigned anybody the duty to look after his affairs in this country®

The Applicant has suggested that the contract of guarantee was frustrated by his exile in Sudan# This in my view is a desperate pleao No act of God or other commensurate circumstance had rendered this contract impossible to perform® The security for payment was situated in Uganda\* It was realisable albeit in the absence of the Applicant® The absence of the Applicant from jurisdiction or the inability of the Respondent to trace him did not absolve the Applicant **of** his obligations under the contract# The Lav/ had provision for such situations and it was applied# It has been suggested by the Applicant in his affidavit that the Court process was manipulated **by** the Respondent against him because he had been a customer of the Respondent for almost 20 years and that the events of 1979 led to **the** exodus of Nubian people from Bombo, an alleged fact, alleged to have been well known to the public including the Respondent.

There is no evidence before me to support these allegations of Manipulation or that certain facts were notorious to the general

public including th© Respondent© At this stage 5 it is not enough just to raise an allegab-on^ l\*\*ere must be proof on a balance of probability to support such assertions if they are to be worthy of belief•

The Plaint was very clear on the extent of liability of the 2nd Defendant? now Applicant\* It acknowledged it did not exceed shs.240,000/=© This is the position save that some interest was still recoverable from the 2nd Defendant under clause 2 thereof. It has not been shown before me how much money was realised in the sale of the Applicants property© Was more than the sum due to the Respondent from the Applicant realised? If so what happened to the difference if any?

Even if more money could have been realised than that due would the Respondents be denied their right to realise the sums due by the sale of the Applicants property? I think not. All the Applicant would be entitled to in the circumstances would be the difference and all such issues could be settled by an action under Section 35 of the Civil Procedure Act.

The proposition that no action can be maintained against a principal and a guarantor at the sametime was not supported **by any** kind of authority whatsoever© I have not been able to come across any. In the premises it cannot be maintained.

For the reasons set out above, this application **is dismissed** with costs notwithstanding my sympathy to the Applicant. It is so ordered©

F. M. S. EGONDA-NTENDE

JUDGE 21/12/1993 $21/1/1993$ $9:06$ a.m.

Present

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Byenkya for Applicant/Defendant Buyondo for Respondent/Plaintiff $A. K.$ Abdullah - Applicant Komakech - Court clerk

Ruling delivered.

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JUDGE $21/12/1993$

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