Bitature v ABSA Bank (U) Limited (Miscellaneous Application 2424 of 2023) [2024] UGCommC 299 (16 September 2024)

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISCELLANEOUS APPLICATION NO. 2424 OF 2023 (ARISING FROM HCCS NO. 1190 OF 2023)** 10 **PATRICK BITATURE ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT**

### **VERSUS**

**ABSA BANK (U) LTD :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT**

# **BEFORE HON. LADY JUSTICE HARRIET GRACE MAGALA**

# **RULING**

# 15 **Background**

This is an application for unconditional leave to appear and defend HCCS No. 1190 of 2023. The Application was brought under Order 36 rules 3 and 4; and Order 52 rules 1 and 3 of the Civil Procedure Rules (CPR), section 33 of the Judicature Act and section 98 of the Civil Procedure Act. The Affidavits in support 20 and rejoinder to the Application were deposed by the Applicant.

The grounds of the Application are that:

- 1. The Respondent has filed HCCS No. 1190 of 2023 against the Applicant wherein she seeks for the recovery of USD \$ 13,568,876 arising from a consent judgement in HCCS 0162 of 2020; - 25 2. The Applicant is not indebted to the Respondent to the above amounts presumably arising from a contract of guarantee as there is no contract of guarantee executed by the Parties relating to the Consent Judgment;

- 5 3. The Consent Judgment sought to be enforced by the Respondent is the subject of an appeal before the Court of Appeal vide Civil Appeal No. 1184 of 2023: Electro – Maxx (U) Limited – vs – ABSA Bank Uganda Limited; - 4. There is an existing application for stay of execution brought by the 10 principal debtor against the Respondent which application is pending before this honourable court; - 5. The Applicant raises *bona fide* triable issues both of law and fact in HCCS 1190 of 2023 and these *inter alia* relate to whether there exists a contract of guarantee between the parties and whether the - 15 enforcement of a consent judgement can be done during the subsistence of an appeal and pending stay of execution; and - 6. The Applicant has a good defence to the suit and it is just and equitable; and in the interest of justice that the application and orders sought for are granted. - 20 The Applicant, in his affidavit in rejoinder introduced additional grounds to the Application; that is: - 1. He is challenging the legality and propriety of the Power Purchase Agreement and the Deed of Assignment entered into by the Parties without the consent of the Attorney General; and - 25 2. He is challenging the enforcement of rights under the Consent Judgement which rights are the subject of an appeal before the court of Appeal.

The Affidavit in reply opposing the Application was deposed by Esther Masawi, the Head Business Support and Corporate Recoveries of the Respondent. The

30 Respondent averred that the Applicant is being sued as a guarantor for the indebtedness of M/s Electro-Maxx (U) Limited (the Principal Debtor) which

- indebtedness was agreed to by a consent judgement dated 24 5 th May 2020 that was signed by the Applicant on behalf of the Principal Debtor and the Respondent at USD \$ 15,891,168. The indebtedness was subsequently reduced upon the payment of 13 monthly instalments and as at 31st August 2023, the indebtedness stood at USD \$ 13,568,876 which is now the subject of the - 10 demand for payment on the Applicant as a guarantor hence the Summary Suit. The Respondent's affidavit in reply was structured along three alleged triable issues as raised by the Applicant. That is: - 1. That the Applicant did not guarantee the sum, the subject of the consent judgement; - 15 2. That the consent judgement is the subject of an appeal before the Court of Appeal; and - 3. That an application for stay of execution of the Consent judgment is pending in the High Court.

#### **Representation**

20 The Applicant was represented by Brian Moogi and Daniel Kisawuzi of M/s Moogi Brian & Co. Advocates. The Respondent was represented by Timothy Masembe Kanyerezi and Timothy Lugayizi of M/s MMAKS Advocates.

#### **Hearing**

Learned Counsel for the Parties made oral submissions. The pleadings and

25 submissions have been considered by the court in arriving at its decision.

### **Determination**

The issue for trial in this Application is whether there exist *bona fide* triable issues to warrant grant of leave to appear and defend *Civil Suit No. 1190 of 2023* to the Applicant.

- 5 I should note that the intention of summary procedure is, 'to facilitate the expeditious disposal of cases involving debts and contracts of a commercial nature to prevent defendants from presenting frivolous or vexatious defences in order to unreasonably prolong litigation.' *See. Post Bank (U) Ltd Versus Abdu Ssozi SCCA No. 08 of 2015.* - 10 However, a defendant under summary procedure has the option to seek remedy of an application for leave to defend the summary suit. See. **Order 36 Rule 4 of the Civil Procedure Rules S. I 71-1 as amended**. But he or she must show that there is a *bona fide* triable issue of fact or law that he or she will advance in defence of the suit. - 15 In the case of *Maluku Interglobal Trade Agency Vs Bank of Uganda [1985] HCB 65, at 66* while considering the above rule, the court held that:

*"Before leave to appear and defend is granted, the defendant must show by affidavit or otherwise that there is a bonafide triable issue of fact or law. When there is a reasonable ground of defence to the claim, the defendant is* 20 *not entitled to summary judgment. The defendant is not bound to show a good defence on the merits but should satisfy the court that there was an issue or question in dispute which ought to be tried and the court shall not enter upon the trial of issues disclosed at this stage."* (Emphasis added)

Further to the above, in *Bunjo Jonathan Vs KCB (U) Ltd Misc. Application No.*

25 *174 of 2014,* while considering the same principle above, court observed that;

*"It is generally accepted that the court should not enter upon a trial on any of the issues raised. However, in the case of Corporate Insurance Co. Ltd Vs Nyali Beach Hotel Ltd [1995-1998], E. A at 7 the Court of Appeal of Kenya ruled that leave to appear and defend will not be given merely because*

- 5 *there are several allegations of fact or law made in the defendant's affidavit. The allegations are investigated in order to decide whether leave should be given. As a result of the investigation even if a single defence is identified, or found to be bonafide, unconditional leave should be granted to the defendant".* (Emphasis added) - 10 In other words, at this stage, the court is not bound to try the successfulness of the defence raised but assess if the defence or issues raised are meritorious or more a sham. *See. Sembule Investments Ltd Versus Uganda Baati Ltd Miscellaneous Application No. 664 of 2009*.

It is always prudent if the Applicant annexes the intended written statement of

- 15 defence to the application for leave to appear and defend. See. *Uganda Commercial Bank Vs Mukoome Agencies [1982] HCB 22***.** Their Lordships then, in *UCB V Mukome Agencies (supra)* observed that this would serve a good purpose if the intended written statement is annexed to the Notice of Motion as it would help the Judge make up his mind whether to refuse or grant the - 20 application. However, failure to attach the intended defence does not invalidate the Application if the purported triable issues are brought forth by Affidavit in support of the Application.

On record, I cannot find the intended written statement of defense attached on this Application. That notwithstanding, the Applicant averred that he had bona

- 25 fide triable issues of both law and fact in *Civil Suit No. 1190 of 2023* and these *inter alia* relate to whether there exists a contract of guarantee between the parties and whether the enforcement of a consent judgment can be done during the subsistence of an Appeal and pending stay of execution. It is important to note that the application for stay of execution was dismissed on - the 23rd 30 October 2023 by His Lordship Justice Stephen Mubiru.

- 5 Under paragraph 8 of the Affidavit in support of the Application, the Applicant states that he has never consented to guarantee Electro-Maxx (U) Ltd under the Consent Judgment. On the other hand, under Paragraph 3 of the Affidavit in Reply, it is stated that the Applicant is sued as a guarantor of the indebtedness of Electro-Maxx (U) Ltd and *Annexture 'B'* of the Affidavit in Reply - 10 indicates that the Applicant guaranteed the debt of Electro-Maxx (U) Ltd together with Simba Oil Ltd.

Under **Section 71 of the Contracts Act, 2010**, a Guarantor is liable to the extent to which the Principal Debtor is liable for the debt and this liability takes effect upon the default by the Principal Debtor.

15 The Applicant denies consenting to any guarantee under the Consent Judgment but on perusal of Annexture B to the Affidavit in Reply to the Application, the document (Consent Deed) bears the signature of the Applicant above his name as a guarantor.

Further, this Court has perused the Plaint in *Civil Suit No. 1190 of 2023*. The 20 Applicant/Defendant is sued as the Guarantor of *USD 13,568,876 owed by Electro-Maxx (U)* Ltd to the Plaintiff/Respondent.

The Plaint has annexed to it, Annexture D1, a Guarantee document dated 30th April 2014 and Guarantee document Annexture D2 dated 6th August 2018, respectively. Annexture D1 that was duly signed and executed by the Applicant 25 who guarantees an amount of *USD 40,730,000 (United States Dollars Forty Million Seven Hundred Thirty Thousand only*) made available to Electro-Maxx (U) Ltd by the Respondent. Annexture D2 which was also executed and signed by the Applicant guarantees an amount of *USD 10,000,000 (United States Dollars Ten Million only).*

5 This court has observed that under **Section 71 of the Contract Act, 2010**, a guarantor's liability is as good as the principal debtor's.

The Applicant does not dispute executing both Annexture D1 and Annexture D2. What he disputes is consenting to guaranteeing Electro-Maxx (U) ltd under the Consent Judgment, which is invalidated by the evidence on record.

- In my opinion, the two instances i.e. the Consent Judgment dated 15 10 th May 2020 and endorsed by Court on the 21 st May 2020, with its Variations and the guarantor liability of the Applicant under the Guarantee document dated 30 th April 2014 and Guarantee document dated 6th August 2018, are quite distinguishable. The latter can be enforced against the Applicant independently - 15 of the former.

Thus, whereas the Applicant asserts that the Consent Judgment is subject to Civil Application No. 1184 of 2023 before the Court of Appeal, this Application does not affect the right of the Respondent to claim against the Applicant as a Guarantor of the facilities advanced to Electro-Maxx (U) Ltd.

- 20 Additionally, the questions for determination in *Civil Suit No. 1190 of 2023* and *Civil Application No. 1184 of 2023* are in my opinion different. *Civil Application No. 1184 of 2023* challengesthe legality of the Consent Judgment dated 15th May 2020 yet *High Court Civil Suit No. 1190 of 2023* seeks to enforce liability of the Applicant under the facilities advanced to Electro-Maxx (U) Ltd; which right the 25 Respondent possess the existence of a Consent Judgment notwithstanding. - The Consent Judgment only attempts to trigger the remedy to enforce the rights of the Respondent under Personal Guarantee that was already signed by the Applicant. This remedy can as well be enforced against the Applicant, even if the Consent Judgment had not been executed i.e. on the default of payment

5 of the sums by Electro-Maxx (U) Ltd. In the circumstances, I find that there are no bonafide triable issues raised by this Application. This Application is frivolous.

# In *Visare Uganda Ltd V Muwema & Co. Advocates and Solicitors Consolidated Miscellaneous Applications No. 826 of 2022 and 827 of 2023*, the court noted

10 that:

*'A frivolous defence is one whose intention is to stall and wrongfully delay settlements of a legitimate claim. By raising frivolous defences and defending the indefensible, such tactics needlessly prolong cases, waste courts' time and other resources. A defence is frivolous where it lacks an* 15 *arguable basis either in law or fact.'*

I have observed from the record, that Electro-Maxx (U) Ltd entered a Consent Judgment with the Respondent vide *HCCS No. 162 of 2020*. This consent was varied twice and both Variations signed by the parties and sealed by the Court. The Applicant signed on behalf of Electro-Maxx (U) Ltd and admitted to having 20 guaranteed the loan facilities in both Variations. Later, the Principal Debtor Electro-Maxx (U) Ltd paid thirteen (13) installments out of the agreed forty-six (46) installments. But then sought to set aside the Consent Judgment and stay its execution, and both Applications were dismissed by Hon. Justice Stephen Mubiru. By filing this Application, the Applicant is basically approbating and

25 reprobating. The principle of approbation and reprobation is based on the doctrine of election, which postulates that no party can accept and reject the same instrument and that "a person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then, turn around and say it is void for the

5 purpose of securing some other advantage." *See. Elim Pentecostal Church Ltd Versus Muwayi Luke Jamine and others HCCS 320 of 2021.*

In the case of *Degeya Trading Stores Ltd V URA CACA No. 44 of 1996*, the Court observed that by accepting the order of the judge with the intention of taking therefrom, the Appellant had waived his right to proceed with an appeal

- 10 in the matter. The Applicant as a director and guarantor of Electro-Maxx (U) Ltd accepted to the terms of the Consent Judgment and partly honored its terms. The Applicant, basing on the second Variation signed a Consent Deed and further accepted the terms of the Consent Judgment, but now turns around to dispute the same. I find this Application an abuse of the court process. - 15 In the premises, this Application is dismissed with costs to the Respondent and judgment entered against the Defendant in Civil Suit No. 1190 of 2023.

**Signed and dated at Kampala this 16th day of September 2024.**

**Harriet Grace MAGALA**

20 **Judge**

**Delivered online (ECCMIS) this 17th day of September 2024.**