EA Development Bank v Blenders Uganda Limited (Civil Suit 306 of 1993) [1993] UGHC 36 (29 November 1993)

Full Case Text

## THE REPUBLIC OF UGANDA

## IN THE HIGH COURT OF UGANDA AT KAMPALA

# CIVIL SUIT NO,3O6/93

E. A. DEVELOPMENT BANK :s::::::::::::::: n PLAINTIFF

#### VERSUS

BLENDERS UGANDA LIMITED :::::::::::::::::::::::::::::::::: DEFENDANTS BEFORE': ' THE HONOURABLE MR, JUSTICE F. M. S, EGONDA NTENDE

R U LI N G:

The applicant, M/S Blenders (U) Ltd., seeks the stay of a warrant of attachment and sale-of moveable property issued by this court on the 26th October 19931 the release of 2 motor vehicles attached in pursuance thereof; and costs of this application. The **application is** brought by Notice of Motion supported by 2 Affidavits. It is opposed by the respondent, M/S East African Development Bank, the original Plaintiff and Decree holder, in the main suit. In addition to an Affidavit in reply, the deponent of one of the Affidavits in support of the application was cross examined on his Affidavit by learned counsel for the respondent.

Briefly the facts of this matter are that the applicant was the Judgment Debtor in the main suit in the sum of shs. 6Ot24l,924/» inclusive of the respondents costs.

On the 22nd June 1993, the respondent applied for execution of the Decree by attachment and sale of the following moveable properties of the applicant

- "(1) The defendants Tata Lorry Reg. No. UPI 871. - (2) Defendants Saloon car Mitsubishi Reg. No. UXE 873, grey in colour. - (3) Office equipment found at defendants office on First Street Kampala."

The Deputy Registrar (Civil) on the 24th JUNE 1993 **granted** thio **appli**cation and issued a warrant of attachment of the same date to SAM

SEWAGUDDE M/S UNILE AUCTIONEERS instructing the Bailiff to attach the above properties.

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Without a return being made in respect of this warrant and without $\mathbb{R}^{n-1}$ any other application for attachment, a fresh warrant of attachment and sale of moveable-property dated 6th July 1993 was issued to SAM SEWAGUDDE t/a M/S UNILE AUCTIONEERS KAMPALA instructing him to attach the following properties:-

the seasons of

"(1) Defendants Tata Lorry No. UPI 871

(2) Defendants Tata Lorry No. UPI 341.

$\overline{2}$

(3) Defendants Saloon car Mitsubishi Reg. No. UXE

873, grey in colour.

$(4)$ Coffee Huller."

$\mathcal{C}_{\text{ref}}$

It would appear that it is the second warrant of attachment dated 6th July 1993 that was executed and the following properties were attached on the following day:-

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$A$ (1) A Coffee Huller

$(2)$ Lorry UPI 341.

It did transpire that the Coffee Huller was at the time being rented by M/S N. G. General Ltd. in the premises belonging to the applicant.

Its attachment amounted to locking it up and denying the applicants or

M/S N. G. General Ltd access to the same. On the 12th July 1993 N. G. General Ltd. submitted written proposals to the respondents advocates.

The relevant letter states:-

"12th July 1993.

Messers Sebalu & Lule Advocates E. A. Building P. O. Box 2255 KAMPALA

Dear Sirs,

Re: HCCS No.306/93 East African Development Bank vs Blenders (U) Ltd.

> We recieved a warrant of attachment and sale of moveable property from Messers Unile Court Bailiffs

> > $\frac{1}{2}$

and Auctioneers demanding payment of Ug. Shs. $60, 241, 924/\pi$ on behalf of your clients East African Development Bank.

$\overline{3}$

The distress order is against Messars Blanders (V) Ltd. who are our Landlords.

We have become parties because we are rentime the soffse plant from Messers Blenders (U) Ltd. Whis plant has also been included in the warrant attachment order. In our agreement with Messers Blenders (U) Ltd., we paid for the rehabilitation. of the plant which remained idle for 10 years. We have spont approximately Ug. abs. 20 million to far, and we are now producing Uganda Coffee known as "NDEGE CUP."

We have talked to M/S Blenders (U) Ltd. who are willing to let us purchase the machinery which in our opinion is valued at approximately Ug. shs. 80 million. This lops, less our rehabilitation costs would leave about Mg. shs.60 million which is owed to you. If we paid this amount, this would help Blenders (U) Ltd. to save the other assets which are also attached.

REPAYMENT: We intend to repay the loan in 6 monthly Instalments of shs. 70 million each. The last payment will be slightly over 10 million because it will include the small balance plus your extra costs in term interest pay.

N. G. General Ltd. has the ability to pay as we are engaged in produce exports and now coffee processing. We enclose a copy of our Bank Statement for JUNE 1993 which shows the scope of our operations. We also enclose aix cheques to gover the entire loan.

We look forward to your accepting our proposal as this will assist us to save our investment and also to save Blenders (U) Ltd from loosing other assets. This will have selved the bank desire to have the lean repaid.

$\mathcal{L} = \mathcal{L} \mathcal{L} = \mathcal{L} \mathcal{L} \mathcal{L}$

We look forward to your early response.

We remain,

$\tau = -4.05$

$\mathcal{M} = \mathcal{M}^{\mathcal{M}} = -\nabla_{\mathcal{M}}$

$\ldots \quad \ldots \quad \ldots$

Yours faithfully,

John J. Ndege Managing Director

$eq. E. A. D. B.$

cg. General Manager, Blenders (U) Ltd."

$\cdot \cdot \cdot \cdot /4$

INCS Sebalu & Lule Advocates responded a month later by a copy of

their letter of 13th August 1993. It states:-

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"13th August 1993.

$d_{i-1}$

M/S Unile Court Bailiffs & Auctioneers Plot 72 Kampala P. O. Box 716 KAMPALA.

Att. Mr. Sewagudde/Lubega

Dear Sirs,

Re: HCCS No.306/1993; E. A. D. B vs Blenders (U) Ltd.

We refer to the above matter and wish to inform you that our clients, accepted terms of payment effered by N. G. General Ltd. for and on behalf of M/S Blenders (U) Ltd.

The purpose of this letter is to advise you to go ahead and make an inventory to Court or in any other way provided by law to finalise the matter."

The letter was copied to M/S N. G. General Ltd. Plot 14 Wilson road Kampala; M/S Blenders (U) Ltd. 1st Street Industrial Area and client.

Following this letter, M/S Unile Court Bailiffs & Auctioneers wrote to the Deputy Chief Registrar a letter dated 1st September 1993 and it states:-

#1st September 1993

The Deputy Chief Registrar High Court of Uganda KAMPALA.

Your Worship,

HCCS No.306/93 East African Development Bank vs Re: Blenders (U) Ltd.

Reference is made to the above where by a warrant was issued to us for execution. This is to inform you that we attached both the Tata Lorry and Coffee huller. However, after auctioning the coffee hullers, the whole debt was liquidated so we released back the lorry to Blenders Uganda Limited.

The Coffee hullers were auctioned to M/S N. G. General Limited under the payment arrangements which were acceptable by the East African Development Bank as per Sebalu Lule's letter of 13th August 1993, photocopy herewith attached and the balance of 10,000,000/= was passed over to Blenders.

$... - 5$

This is now to return the warrant fully executed and the and to request you to treat the matter as closed.

$\overline{a}$

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$\ldots \mathbb{R}^n \to \mathbb{R}^n \cdots$

Yours faithfully,

cc. Sebalu & Lule Advocates

cc. Blenders (U) Ltd.

N. G. General Ltd." $cc.$

$\mathbb{F}^{\mathcal{M}} \to \mathbb{F}^{\mathcal{M}}$ must also add to the On the 17th September 1993 M/S Unile Court Bailiff & Auctioneers wrote

to the Applicant as under:-

North of the a "17th September 1993

The Manager Blenders (U) Ltd. P. O. Box $7054$ KAMPALA.

Dear Sir,

Re: HCCS No.306/93 East African Development Bank versus Yourselves.

a contains a mathline.

Reference is made to the above and we wish to inform you that your coffee hullers were auctioned to M/S N. G. General Ltd.

However, after settling all the outstanding amount on your loan plus the lawyer's and our fees, there remained a balance of Ug. shs.10,000,000/=.

This is to forward to you cheques covering the 10,000,000/ $=$ (tc \_\_illion shillings) that is cheque No. 027659 for $3,000,000/=$ cheque No. 027655 for $3,000,000/=$ cheque No. 027656 for $4,000,000/=$ $44.212...$

$10,000,000/=$ TOTAL . .

Please acknowledge reciept by return post. This is now to settle the whole matter.

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Yours faithfully,

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S. Sewagudde For: Unile Court Bailiffs & Auctioneers.

cc. Chief Registrar High Court of Uganda

cc. N. G. General Ltd."

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$\mathcal{A} = \mathcal{A}$

$\cdots \qquad \cdots \qquad \cdots$

Only one of the six (6) post dated cheques the respondent recieved from the N. G. General Ltd. was honoured. As a result the respondents Advocates wrote to the Ag. Deputy Registrar High Court of Uganda the following letter setting out their position at the time. It states:-

"14th Oatober 1993

Ag. Deputy Registrar High Court of Uganda Kampala.

Your Worship,

HCCS No.306/93 E. A. D. B. vs Blenders (U) Ltd. Re:

We refer to the above case and a letter from Mr. S. K. Sewagudde t/a Unile Court Bailiffs and Auctioneers dated 1/9/93 addressed to you and copied to us.

By that letter your office was informed that the warrant was fully executed and you were requested to treat the matter as closed. This was done on our request after our clients had accepted N. G. General Ltd.'s terms of payment of the Judgment debt for and on behalf of the Judgment Debtor i.e Blenders (U) Ltd. (underlining is mine).

The said N. G. General Ltd. had paid our clients post dated cheques and we enclose their request for your perusal. Only one cheque for shs. 10 million was honoured. Another cheque for shs. 10,000,000/= dated $25/8/93$ was dishonoured on $27/8/1993$ . This fact was immediately communicated to N. G. General Ltd. and Blenders (U) Ltd. but up to now no payment has been made.

It is trite law that payment by cheques is conditional on the same being honoured. Once the cheques are dishonoured the debt resurrects and falls due and payable. This position is strengthened by several authorities and a few of them are as follows:-

$1.$ Kamurdin Mohamed vs Jinja Co-op. Society 1957 $E + A$ 443.

Manji J. Khodabhai vs Sing [1957] E. A. 291. $2.$

Consquently, it is our contention that since N. G. General Ltc's cheques have bounced, the outstanding debt has fallen due and payable.

Accordingly we request that you issue a fresh warrant of attachment and sale of properties of the debtor in order to recover shs. $50,241,924/=$ .

nn = = = 17

Besides although in the said letter of auctioneers it is stated a sale of coffee huller to N. G. General Ltd. took place, the machine has not been formally transferred to N. G. General and as such it is still under attachable properties of the Judgment Debtor's After all N. G. General Ltd. is guilty of issuing the dishonoured cheques by reason of which it sannot properly object to the attachment of the coffee huller.

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Yours faithfully,

### Sebalu & Lule Advocatos and Legal Consultants."

This letter was recieved in the Civil Registry on the 19th Catcher 1993. On the same date an application for execution of the Decree dated 14th October 1993 was also filed by M/S Sebalu & Luls seeking the attachment and sale of:-

Tata Lorry Reg. No. UPI 341 $\mathbf{1}_{\mathbf{a}}$

$2.$ Tata Lorry Reg. No. UPI 871

Saloon car Mitsubishi Reg. No. UXE 873 $3.$

doffes huller.

In addition to the above application, another application for estabment bearing the same dates of making and reciept as the previous one was lodged and it sought attachment of :-

- 1. Defendants Tata Larry Reg. Mo-SPI 341. - 2. Defendants Saloon Car Mitsubishi Reg. No. UXE 873 grey in colour.

Apparently acting on the last preceding application the Registrar, on the 26th October 1993, issued a warrant of attachment to MR. MATIYA KIYEMBA T/A SUNRISE ASSOCIATED AUCTIONEERS KAMPALA to attach and sale the above 2 vehicles. This warrant wes executed and the said 2 vehicles are currently in the hands of the auctioneer resulting in the present application before me.

It was the contention of the Applicant that the Decree in the original suit had been satisfied according to the return made by the

$...8$

Court Bailiff SAM SEWAGUDDE who had been entrusted with the task of attachment and sale of the attached property. Mr. Sam Sewagudde swore an affidavit by which he stated that on 23/7/93 he sold by **eaction** the huller he attached for a sum of shs. $72,300,000$ . He further deponent-

with the first upon that I duly advised M/S. N. G. General Ltd. on the Rode of payment of the money due under the sale.

> 8. That I later learnt that N. G. General Ltd., contacted M/S Sebalu & Lule Advocates, lawyers for the Plaintiff/Respondent in this suit and ' offered to pay the money under a schedule which. was accepted by E. A. B. B. and its laywers. I. recieved written communication dated 13th August.1993 from Sebalu and Lule Advocates advising me that what I had done was proper and I could go ahead and make inventory to Court to finalise the matter."

Mr. Sewagadde made a return accordingly as seen earlier on. Gounsel for the Applicants submitted that the only course of action open to the respondent/plaintiff was under $0.19$ rule 79 (1) of the Civil Procedures which provides for the resole of the property in default. of payment. He referred to the case of Somakula is Muscke and 2 Others 1981 HCB. 46. He prayed that this application be allowed - with costs, the wayrant of attachment and sale in issue be cancelled and the attached vehicles released.

Hr. John Matoru, Bearned counted for the respondent, rigorously opposed this application. He submitted that there was no attachment of the coffee huller as it was immovemble property and the warrant of attachment was for moreable properties. He asserted that it was never austioned by the fourt Bailiff. Jam Sewagudde. In his view of the facts, M/S Blenders (U) Lide sold the coffee buller to N. G. General Ltd. on the 12th July 1993 and the only proposal accepted by ~ Sebalu & Lule Advocates was for payment by post dated cheques and

$00000/9$

not cash. Learned counsel, Mr. John Matovu, further asserted that by the time the purported auction took place,., tae title of the coffee huller had already passed to N. G.' General' Ltd. and impliedly there was nothing to auction by the purported date of the auction. As evidence of the fact that a sale occured between N. G. General Ltd. and Blenders (U) Ltd, Mr. Matovu referred this court to N. G. General Ltd's letter dated 12th July 1993\*

Mr. Matovu further attacked the purported auction, jfox failing to comply with 0.19 rule 64 in so far as the coffee huller, which he referred to as immoveable property, was sold in less than JO days from the date of the notice. He argued that even if it was moveable property it was sold one day less than that allowed by rule 64. He therefore submitted that there was no auction of the coffee holler and that the r^s^xsnd^nt/defondants wero therefore entitled to apply for attachment of any property belonging to the *def*endanta/?\*pplleunto.

In considering what actually took place it may be helpful set out th\*? following portions of the affidavit of Mr. B. Bamwine an advocate with Sebaln &■ Lulo who had p*<yva*onal conduct of It states:-

> "3» That the attachment of the coffee huller and lorry UPI j4l was made on 7th July 1993\* 4. That on the 12th day of July 1993 Hon. John J. Ndege the Managing Director of N. G. General Ltd. who were wheretofore renting the coffee plant from M/S Blenders (U) Ltd. agreed with Blenders (U) Limited that instead of the huller being sold in execution, N. G. General Ltd. buys the same from Blenders (U) Ltd. to enable the latter pay off the Judgment debt.

5. That on the same day, 12/7/93 M/S N. G. General Ltd. approached us with their letter dated 12/7/199J to let us know their agreement with Blenders (U) Ltd. and the proposals for payment of the judgment ..

/10

*9* debt in order to rescue assets of M/S Blenders Uganda Limited. The said letter with all its annextures<is attached and marked "An.

- That the said letter of 12/7/1993 was copied to Blenders (U) Ltd. and the latter did not deny its contents and intents. - 7. That we accepted the said terms and post dated cheques (6) were given bo us covering the loan. - 8»- That on the same.day, I personally talked to one •• Lubega on telephone telling him to release the motor vehicle and the huller on reciept of their fees| because we had accepted the proposals of N. G. General Ltdo to pay off the debt for and on behalf of M/S Blenders (U) Ltdo and it was later formally communicated to the Auctioneers by letter of 13/8/1993 marked ''B".

In order to determine the' rights and obligations of the parties hereto, it is important in my view to first determine what exactly happened on the 12th July 1993© When the affidavits of Mr. Kakaire, Mr. Sam Sewagudde and Mr. B# Bamwine. are read together, the picture I <m to describe emerges.

There was indeed an attachment of the coffee huller and a lorry belonging to the applicants on the 7/7/19'93The coffee huller was being rented by N. G. General Ltd. from the applicant. After attachment of the same\* N«G. General Ltdo and the applicant2 M/s Blenders (U) Ltd. were put out of possession of the coffee huller. though it remained on the Applicant's premises'. The bailiffs locked it off®

N. G. General Ltd. on the 12th July 1992 put forward to the respondents proposals calling forth for a tripartite agreement between the Applicants, the Respondents and N. G. General Ltd. In putting forward these proposals, it is clear that N. G. General Ltd. was acting **fir\*t** and foremost, in its own interests that appeared threatened by the

oo/11

attachment and not as agents of Blenders (U) Ltd. This is clear from the following passage of the letter.

> 11 . . . . . . . . . . . . . . . . . . We have become interested parties because we are renting the coffee plant from Messers Blenders (U) Ltd. This plant has also been included in the warrant attachment order. In our agreement with Messers Blenders (U) Ltd, we paid for the rehabilitation of the plant which remained idle for 10 years. We have. spent approximately Ug. shs. 20 million so far and we are now producing Uganda Coffee known as "Ndege Cup".

$\cdot$ $\cdot$ $\cdot$

It is also clear that N. G. General Ltd. was acting on the basis of the fact that the coffee huller was under attachment and was therefore calling for a tripartite agreement between the respondent, applicant and itself. N. G. General Ltd. consulted the applicant and stated the applicants' position to be:-

> "We have talked to Messers Blenders (U) Ltd. who are willing to let us purchase the machinery which in our opinion is valued at approximately Ug. shs. 80 million. This, less our rehabilitation costs would leave about $U_{5}$ . shs.60,000,000/= which is owed to you. If we paid this amount, this would help Blenders (U) Ltd. to save the other assets which are also attached."

From the above, it is clear that the position of Blenders (U) Ltd. was that it was willing to sell this property at its market value price to N. G. General Ltd. who would pay off whole judgment debt from the price of the coffee huller directly to the respondents. Then N. G. General Ltd. made its payment or repayment proposals to the respondents advocates seeking to spread this over a 6 months period. N. G. General Ltd. in an effort to sell this proposal stated:-

> "N. G. General Ltd. has the ability to pay as we are engaged in produce exports and now Coffee Processing. We enclose a copy of our Bank Statement for June 1993 which shows the scope of our operations. We also enclose six cheques to cover the entire loan.

We look forward to your accepting our proposal as this will assist us to save our investment and also save Blenders (U) Ltd. from loosing other assets. This will also have solved the Bank desire to have the loan repaid."

$... / 12$

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N. G. General Ltd. was offering to take over the obligation of the Applicant to pay the Judgment debt. In doing so it was acting on its own behalf to protect its interests and the benefit to the applicant was incidental. The Respondent accepted the above proposals on the same day, the 12th July 1993 after meeting N. G. General Ltd. As it were it accepted N. G. General Ltd's ability to pay the Judgment debt and immediately ordered the release of all attached properties. The applicant was consquently impliedly released from payment of the judgment debt and substituted by N. G. General Lid, whose offer to pay over a six dation bloques th months period was accepted by the respendents. By accepting the six post dated cheques the respondents were accepting that liability for payment had shifted from the applicant to M/S N. G. General Ltd. .................................. $\mathcal{M} = \{0, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1,$ $\n\frac{1}{2}\n$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$

In my view, what happened is something that amounts to "Novation." This matter was considered in the case of Bensamin Scarf vs. Alfred and manager and George Jardine. 1882 (vii) App. cases 345 where at page 351 Lord Selbone L. C. stated:-

"In the Court of first instance the case-was treated. the really as one of what is called "novation" which as I understand it means this - the term being derived on from the civil law that there being a contract in existence, some new contract is substituted for it, either between the same parties (for that might be) or between different parties; the consideration mutually being the discharge of the old contract. A common instance of it in partnership cases is where upon the dissolution of a partnership the persons who are going to continue in business agree and undertake, as between themselves and the retiring partner, that they will assume and discharge the whole liabilities of the business, usually taking over the assets; and if in that case they give notice of that tarrangement to a Creditor, and ask for his. accession to it, there becomes a contract between the Creditor who accedes and the new firm, to the effect that he will accept their liability, and on This is the other hand that they promised to pay him for a ver that consideration."

$. 165.$ 3-11in Siza Arabin stated on Highest surfaces in This same principle was considered in the case of Tolhurst vs. Main thong the current led a The Associated Portland Cement Manufacturers (1902) 2 K. B. 166. Collin

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M. R. at page 668 expounded the principle in the following words:-.. $-\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\lambda_{\text{max}} \leftarrow \alpha_{\text{max}}$

$\cdots \cdots \cdots$

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"It is, I think, quite clear that neither at law nor in equity could the burden of a contract be shifted off the shoulders of a Contractor on to these of another without the consent of the Contractee. A debtor cannot relieve himself of his liability to his Creditor by assigning the burden of the obligation to someone else; this can only be brought about by the consent of all the three and involves the release of the original debtor."

Novation was also considered in the Ugandan case of G. P. Pabari Vs. Meghji Natho Shah and Others (1961) E. A. 677. In that case attachment was issued against the moveable property of the Appellant but before execution of the Warrant the Advocates for the Respondent wrote to the court stating that the matter had been settled between the parties and that the attachment should be withdrawn. Subsquently an application by the Respondents for execution by attachment of certain shares a prohibitory order attaching the shares was made. The Appellant then applied to the High Court to set aside the prohibitory order on the grounds that the Decree was incapable of execution as a settlement had been reached between the parties and the court had been so informed; and that there had been a novation by a partial payment by the Appellant and the issue to the Respondents of promissory notes by a third party for the balance. The Judge dismissed the application holding that the Appellants affidavit in support of the application did not clearly establish there had been a novation, and that statements in the letter from the Advocates for the Respondents to the court that the matter had been settled did not necessarily mean that the Respondents had released the Appellant from liability. On appeal it was contended that there had been a novation and that as a settlement had been reached and notified to the court, the prohibitory order should be set aside. It was held by the Court of Appeal for East Africa that:-

$(1)$ There was no sufficient evidence that there had been a novation and the letter from the Advocate for the Respondents did not necessarily mean that the Decree

$\cdot$ .

$0000/14$

had been adjusted and did not amount to a certificate for the purposes of 0.19 rule 2(l) of the Civil Procedure Rules.

- (ii) As the Appellant had not followed the procedure prescribed in 0.19 rule 2(2) of the Civil Procedure Rules the alleged adjustment of the Decree could not be recognised by the court; with the result that the court was entitled to make the Prohibitory Order\* - (iii) The application was misconcieved and the Appellants remedy as Judgment Debtor was to inform the court under 0.19 rule 2(2) of the payment or adjustment which he alleged and to apply for the issue of a notice to the Respondents to show cause why payment or adjustment should not be recorded#

In the first place I would understand this case to demonstrate the principle that novation can render a Decree incapable of execution if there are sufficient facts to show that a novation took place. In that case there were not sufficient facts to prove novation#

Counsel for the Respondent had relied on the last holding that the Appellants remedy as Judgment Debtor was to proceed under 0o19 rule 2(2) to inform the court of the payment or adjustment which he alleged and not to. bring the application which he did to set aside the warrant of attachment. In my view the present case is distinguishable from Pabari vs\* Meghji (supra). In Pabari vs. Meghji though attachment had issued no execution of the warrant had taken place. In the present case execution took place and there was a return of the warrant made by the Court Bailiff to this court. Secondly, where the facts of the matter show a novation to have taken place then 0.19 rule 2(2) is inapplicable as it deals with payment or adjustment of the Decree# Novation renders the Decree incapable of execution as it will have merged into a new debt.

In my view, novation exists where a liability to pay by one party to another of a debt, including a judgment debt and the Creditor accepts a third party to pay such debt in place of the original debtor upon such

- 14 -

terms as the Creditor and third party agreed upon and the original Debter is released from payment of the old debt. Then, novation will have taken place and the original Debtor cannot be liable on the old debt. The old debt will have been substituted with the new debt. In the case before me it is clear that from the letter of 12th July 1993 from N. G. General Ltd. to Sebalu & Lule Advocates the offer an offer to substitute liability from of N. G. General Ltd. was Blenders (U) Ltd to N. G. General Ltd. discharging Blenders (U) Ltd. from the stage and leaving East African Development Bank looking to N. G. General Ltd. for the payment of the old Judgment Debt over a 6 months period.

This offer was verbally accepted by East African Development Bank on, the $12/7/93$ , the day it was made. Paragraph 8 of the affidavit of Mr. Bamwine of Sebalu & Lule refers. Immediate instructions which amount to a discharging of Blenders (U) Ltd. were given and its other property released. This is clearly expressed in M/S Sebalu & Lule's letter dated 14th October 1993 addressed to the Ag. Deputy Registrar High Court of Uganda which states in part:-

"We refer to the above case and a letter from Mr. S. K. Sewagude t/a Unile Court Bailiffs and Auctioneers dated $1/9/1993$ addressed to you and copied to us. By that letter your office was informed that the warrant was fully executed and you were requested to treat the matter as closed. This was done on our request after our clients had accepted N. G. General Ltd.'s terms of payment of the Judgment Debt for and on behalf of the Judgment Debtor i.e Blenders $(U)$ Ltd."

In addition to the above there is the question of the payment of sh $\cdot$ . 10,000,000/= by the court bailiffs to the applicants which was the balance of the proceeds from the sale of the coffee huller over and above the sums N. G. General Ltd. was to pay to the Respondents. Had the Applicant not been discharged from payment of the Judgment Debtor he would not have recieved a portion of the proceeds of the sale when the Judgment debt was

..../16..

still substiting against it. The only reasonable conclusion is that the Applicant was discharged from payment of the judgment^debt as a new liability had emerged by N. G. General Ltd. taking over to pay East African Development Bank, the present Respondents (Plaintiffs).

In my view the Respondents/plaintiffs elected to look to N. G. General Ltd. for payment. They must be held to this election. The R^epandentsi rightly advised th© court Bailiff to advise this court to treat this matter as closed and it should remain so.

In view of the foregoing I am unable to accept the contention. by -counsel for the Applicant that the Decree in the instant case was satisfied after execution and sale of the applicants property. accept that attachment issued and the warrant of attachment was executed. Two properties were attached - A Coffee huller and lorry belonging to the Applicants. Subsequently before the purpoted sale of the said properties by public auction as required by law there was tripartite agreement between the parties and N. G. General Ltd. under which N. G. General Ltd. assumed, with the consent of the Respondent, Liability to pay the old Judgment debt and the applicant was discharged from the picture.

To an extent, I accept the submission of Mr. John Matovu that there was no sale by auction of the Coffee Huller even though the firm on whose behalf he acted had all along treated this matter as though an auction had taken place. The sale of the coffee huller was by agreement of the Applicant, the Respondent, N. G. General Ltd. and the court bailiff who had effected the execution.

As I have found that the Decree in this case is incapable of execution I do hold that the warrant of attachment and sale of moveable property dated 26th October 1993 cannot be maintained and /17

should be vacated forthwith. Any property attached in pursuance thereof should be released immediately. Cost of this application are awarded to the applicants. It is ordered accordingly.

F. M. S. EGONDA-NTENDE

JUDGE 29/11/93.

29/11/93 9:05 a.m. Present Kafuko Robert for Applicant/Defendant Bamwine for the Respondant/Plaintiff Muwonge — Court clerk.

Ruling delivered.

F. M. Sa EGONDA-NTENDE

JUDGE 29/11/93