Paul Kasagga and Anor v Barclays Bank (U) Ltd (HCT-00-CC-MA 113 of 2008) [2008] UGCommC 42 (21 August 2008)

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}{\f1\fs28\insrsid14840973\charrsid4410407 \par \par IN THE HIGH COURT OF UGANDA AT KAMPALA \par }{\f1\fs28\lang1036\langfe1033\langnp1036\insrsid14840973\charrsid4410407 COMMERCIAL COURT DIVISION \par }{\f1\fs28\lang1036\langfe1033\langnp1036\insrsid14840973 \par }{\f1\fs28\lang1036\langfe1033\langnp1036\insrsid14840973\charrsid4410407 \par }{\b\f1\fs28\lang1033\langfe1033\langnp1033\insrsid14840973\charrsid14840973 HCT-00-CC-MA-\~}{\b\f1\fs28\lang1033\langfe1033\langnp1033\insrsid13307827 0113}{\b\f1\fs28\lang1033\langfe1033\langnp1033\insrsid14840973\charrsid14840973 -2008 \par }{\b\f1\fs28\lang1033\langfe1033\langnp1033\insrsid14840973\charrsid7867159 (Arising from HCT-00-CC-CS-0}{\b\f1\fs28\lang1033\langfe1033\langnp1033\insrsid14840973 51-2008}{\b\f1\fs28\lang1033\langfe1033\langnp1033\insrsid14840973\charrsid7867159 ) \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid14840973 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\dpptx194\dppty323\dpptx202\dppty329\dpptx211\dppty334\dpptx221\dppty338\dpptx233\dppty342\dpptx246\dppty346\dpptx259\dppty350\dpptx274\dppty353\dpptx290\dppty355\dpptx324\dppty359\dpptx360\dppty360\dpptx324\dppty361\dpptx290\dppty365\dpptx274\dppty367 \dpptx259\dppty370\dpptx246\dppty374\dpptx233\dppty378\dpptx221\dppty382\dpptx211\dppty387\dpptx202\dppty392\dpptx194\dppty397\dpptx188\dppty402\dpptx184\dppty408\dpptx181\dppty414\dpptx180\dppty420\dpptx180\dppty660\dpptx179\dppty666\dpptx176\dppty672 \dpptx172\dppty678\dpptx166\dppty683\dpptx158\dppty689\dpptx149\dppty694\dpptx139\dppty698\dpptx127\dppty702\dpptx114\dppty706\dpptx101\dppty710\dpptx86\dppty713\dpptx70\dppty715\dpptx36\dppty719\dpptx0\dppty720\dpx2160\dpy104\dpxsize360\dpysize720 \dpfillfgcr255\dpfillfgcg255\dpfillfgcb255\dpfillbgcr255\dpfillbgcg255\dpfillbgcb255\dpfillpat0\dplinew15\dplinecor0\dplinecog0\dplinecob0}}}}{\f1\fs28\insrsid9653326\charrsid9653326 Paul Kasagga }{\f1\fs28\insrsid9653326 \tab \tab }{ \f1\fs28\insrsid9653326\charrsid9653326 \'85\'85\'85\'85\'85\'85\'85\'85}{\f1\fs28\insrsid14840973\charrsid9653326 \'85\'85\'85\'85\'85\'85 APPLICANT}{\f1\fs28\insrsid7820201 S}{\f1\fs28\insrsid14840973\charrsid9653326 \par }{\f1\fs28\insrsid9653326\charrsid9653326 Andrew Kasagga }{\f1\fs28\insrsid14840973\charrsid9653326 \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid14840973 {\b\f1\fs28\insrsid14840973\charrsid7867159 VERSUS \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid14840973 {\f1\fs28\insrsid14840973\charrsid4410407 \par }{\f1\fs28\insrsid14840973 BARCLAYS BANK (U) LTD }{\f1\fs28\insrsid14840973\charrsid4410407 \'85\'85\'85\'85}{\f1\fs28\insrsid14840973 \'85}{\f1\fs28\insrsid9653326 \'85.}{\f1\fs28\insrsid14840973 \'85...}{\f1\fs28\insrsid14840973\charrsid4410407 \'85 \'85 RESPONDENT }{\f1\fs28\insrsid14840973 \par }{\f1\fs28\insrsid14840973\charrsid4410407 \par \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid14840973 {\f1\fs28\insrsid14840973 BEFORE HON.}{\f1\fs28\insrsid14840973\charrsid4410407 }{\f1\fs28\insrsid14840973 MR. JUSTICE LAMECK N. MUKASA \par \par }{\b\f1\fs28\insrsid14840973\charrsid7867159 RULING}{\f1\fs28\insrsid14840973 : \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10905965 {\f1\fs28\insrsid14840973 \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2381322 {\f1\fs28\insrsid14840973 This is an }{\f1\fs28\insrsid10905965 application by}{\f1\fs28\insrsid14840973 Notice of Motion under order 36 rule 4, Order 52 rule 1 of the Civil Procedure Rules and section 98 of the Civil Procedure Act for orders that: \par \par {\listtext\pard\plain\f1\fs28\lang2057\langfe1033\langnp2057\insrsid14840973 \hich\af1\dbch\af0\loch\f1 (i)\tab}}\pard \qj \fi-720\li1080\ri0\sl360\slmult1\widctlpar \jclisttab\tx1080\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin1080\itap0\pararsid2381322 {\f1\fs28\insrsid14840973 Unconditional leave to appear and defend the main suit be granted to the applicants \par {\listtext\pard\plain\f1\fs28\lang2057\langfe1033\langnp2057\insrsid14840973 \hich\af1\dbch\af0\loch\f1 (ii)\tab}Costs for the application be provided for. \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2381322 {\f1\fs28\insrsid14840973 \par The grounds for this application are briefly that:- \par \par {\listtext\pard\plain\f1\fs28\lang2057\langfe1033\langnp2057\insrsid14840973 \hich\af1\dbch\af0\loch\f1 (a)\tab}}\pard \qj \fi-480\li840\ri0\sl360\slmult1\widctlpar\jclisttab\tx840\aspalpha\aspnum\faauto\ls2\adjustright\rin0\lin840\itap0\pararsid2381322 { \f1\fs28\insrsid14840973 The applicants do not owe the respondent any money \par {\listtext\pard\plain\f1\fs28\lang2057\langfe1033\langnp2057\insrsid14840973 \hich\af1\dbch\af0\loch\f1 (b)\tab}The guarantee documents attached to t}{\f1\fs28\insrsid8222941 he plaint are }{\f1\fs28\insrsid14840973 not related to the Respondents claim of Ugshs2,211,653/05 and are not enforceable against the applicants. \par {\listtext\pard\plain\f1\fs28\lang2057\langfe1033\langnp2057\insrsid14840973 \hich\af1\dbch\af0\loch\f1 (c)\tab}There has been no demand by the Respondent in respect of any guarantees. \par {\listtext\pard\plain\f1\fs28\lang2057\langfe1033\langnp2057\insrsid15487367 \hich\af1\dbch\af0\loch\f1 (d)\tab}}{\f1\fs28\insrsid15487367 It is just, fair and equitable that unconditional leave to appear and defend be granted to the defendant}{ \f1\fs28\insrsid7820201 s}{\f1\fs28\insrsid15487367 /applicants.}{\f1\fs28\insrsid14840973 \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2381322 {\f1\fs28\insrsid15487367 The application is supported by two affidavits by the applicants}{\f1\fs28\insrsid8222941 ,}{ \f1\fs28\insrsid15487367 Paul Kasagga and Andrew Kasagga, respectively, wherein they echo the above grounds. \par \par The main suit was brought by summary procedure. The Respondent, Barclays Bank of Uganda Ltd, therein seeks to recover from M/s Zzimwe Enterprises Hardware & Construction Ltd and the Applicants a sum of Ugshs2,211,653}{\f1\fs28\insrsid3539192 ,}{ \f1\fs28\insrsid15487367 283/05. \par \par In the plaint, the Respondent claims against Applicants as guarantors. The pleadings state:- \par \par }\pard \qj \li567\ri567\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin567\lin567\itap0\pararsid2381322 {\f1\fs28\insrsid15487367 \'93}{\f1\fs28\insrsid3539192 6. }{\f1\fs28\insrsid15487367 By Guarantees made in writing and duly executed by the second and third defendant (the Guarantors) in favour of Nile Bank Ltd, the said Guarantors guaranteed the repayment of all and every sum(s) of money owing from the first Def endant/Principal Debtor to Nile Bank Limited (copies of the Guarantees are attached as \'93B}{\f1\fs28\insrsid3539192 1}{\f1\fs28\insrsid15487367 \'94 and \'93B2}{\f1\fs28\insrsid3539192 )}{\f1\fs28\insrsid15487367 . \par 7. To-date the first Defendant has neglected/failed/ref}{\f1\fs28\insrsid3539192 used}{\f1\fs28\insrsid15487367 to discharge its indebtedness ar}{\f1\fs28\insrsid3539192 i}{\f1\fs28\insrsid15487367 sing from the overdraft facility it enjoyed from }{ \f1\fs28\insrsid14093994 Nile Bank Limited, which is tantamount to breach of contract, for which the plaintiff, holds the first Defendant liable. Further, the plaintiff contends that the second }{\f1\fs28\insrsid3539192 and}{\f1\fs28\insrsid14093994 third Defendants as Guarantors of the first Defendant have similarly not honoured their obligation under the Guarantees to settle the indebtedness of the first Defendant and are thus also in breach.\'94}{\f1\fs28\insrsid15487367 \par }{\f1\fs28\insrsid14093994 \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2381322 {\f1\fs28\insrsid14093994 Representation was Mr. Kavuma Kabenge for the Applicants. The Respondent was represented by Mr. Andrew Kasirye jointly with Mr. Okua. \par \par In application}{\f1\fs28\insrsid3539192 s}{\f1\fs28\insrsid14093994 for leave to defend the law is that the applicant must show by affidavit or otherwise that there is a bonafide triable issue of fact or law. Any defence raised should be stated with sufficient particulars as to appear genuine and not generally vagu e statements denying liability. See }{\i\f1\fs28\ul\insrsid14093994\charrsid7409183 Muluku Interglobal Trade Agencies Vs Bank of Uganda (1985) HCB 65, Tororo District Administration Vs Andalap Industries (1997) IV KALR 126}{\f1\fs28\insrsid14093994 .

\par \par The Respondent}{\f1\fs28\insrsid3539192 \rquote }{\f1\fs28\insrsid14093994 s claim, in the main suit}{\f1\fs28\insrsid3539192 ,}{\f1\fs28\insrsid14093994 against the Applicants is based on the Guarantee Deeds, annextures \'93B1\'94 and \'93B2\'94 to the} {\f1\fs28\insrsid7409183 plaint. In their respective affidavit}{\f1\fs28\insrsid3539192 s}{\f1\fs28\insrsid7409183 the Applicants argue that the said guarantee documents do not relate to the Respondent}{\f1\fs28\insrsid3539192 \rquote }{ \f1\fs28\insrsid7409183 s claims of Shs2,211,653,283/05 and contend that they are not enforceable against them. Further that there had not been demand by the Respondent in respect of the guarantees.}{\f1\fs28\insrsid14093994 \par }{\f1\fs28\insrsid7409183 \par The Respondent filed an affidavit in reply deponded to by its Manager Corporate Recoveries, Ms Esther Masazi Bir}{\f1\fs28\insrsid3539192 u}{\f1\fs28\insrsid7409183 ngi. She therein states:- \par \par }\pard \qj \li567\ri567\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin567\lin567\itap0\pararsid2381322 {\f1\fs28\insrsid7409183 \'933That between May 2005 and May 2006 , the Applicants}{\f1\fs28\insrsid1388950 \rquote }{ \f1\fs28\insrsid7409183 Company M/s Zzimwe Enterprises Hardware & Construction Ltd obtained }{\f1\fs28\insrsid14425705 overdraft facilities from the then Nile Bank Ltd totalling Ugshs1,600,000,000/= }{\f1\fs28\insrsid1388950 (}{\f1\fs28\insrsid14425705 Uganda Shillings one billion six hundred million only)}{\f1\fs28\insrsid7409183 \par }{\f1\fs28\insrsid14425705 4. THAT under the overdraft facilities}{\f1\fs28\insrsid1388950 \rquote }{\f1\fs28\insrsid14425705 letters, the borrower M/s Zzimwe Enterprises Hardware & Construction Ltd undertook to furnish security for }{ \f1\fs28\insrsid1388950 the }{\f1\fs28\insrsid14425705 said fac}{\f1\fs28\insrsid1472136 i}{\f1\fs28\insrsid1388950 li}{\f1\fs28\insrsid14425705 t}{\f1\fs28\insrsid1388950 i}{\f1\fs28\insrsid14425705 e}{\f1\fs28\insrsid1388950 s}{\f1\fs28\insrsid14425705 including Gua}{\f1\fs28\insrsid16389446 ra}{\f1\fs28\insrsid14425705 ntees }{\f1\fs28\insrsid16389446 from its directors.}{\f1\fs28\insrsid14425705 \par }{\f1\fs28\insrsid16389446 5. THAT the overdraft facilities}{\f1\fs28\insrsid1388950 \rquote }{\f1\fs28\insrsid16389446 letters were signed for and on }{\f1\fs28\insrsid4851362 behalf}{\f1\fs28\insrsid1472136 of M/s Zzimwe Enterpr}{ \f1\fs28\insrsid16389446 ises Hardware & Construction Limited by the Applicants herein, Paul Kasagga and Andrew Kasagga}{\f1\fs28\insrsid1388950 ,}{\f1\fs28\insrsid16389446 as Director and Managing Director respectively. \par 6. THAT by }{\f1\fs28\insrsid4851362 virtue}{\f1\fs28\insrsid16389446 of the }{\f1\fs28\insrsid4851362 u}{\f1\fs28\insrsid16389446 ndertaking }{\f1\fs28\insrsid4851362 mentioned}{\f1\fs28\insrsid16389446 in paragraph 5 above, t he Applicants executed individual unlimited Guarantees in favour of Nile Bank Ltd. \par 7. --- that the Demand upon the Applicants was served upon the}{\f1\fs28\insrsid1388950 m}{\f1\fs28\insrsid16389446 in November 2007; the said demand }{\f1\fs28\insrsid4851362 being signed in acknowledgment of receipt by the first Applicant at the direct}{\f1\fs28\insrsid1388950 ion}{\f1\fs28\insrsid4851362 of the 2}{\f1\fs28\super\insrsid4851362\charrsid4851362 nd}{\f1\fs28\insrsid4851362 Applicant. (A copy of the Demand is attached and marked \'93A\'94).}{\f1\fs28\insrsid16389446 \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2381322 {\f1\fs28\insrsid4851362 \par In paragraph 10 she avers that sometime in the year 2007 the Respondent acquired Nile Bank Limited and thereby took over }{\f1\fs28\insrsid1388950 and}{\f1\fs28\insrsid4851362 became entitled to all the assets, liabilities}{\f1\fs28\insrsid1388950 ,}{ \f1\fs28\insrsid4851362 title and interest of Nile Bank Ltd. Annexture B to the affidavit is the letter of notification }{\f1\fs28\insrsid1388950 of transfer of the business of}{\f1\fs28\insrsid4851362 Nile Bank Ltd to }{\f1\fs28\insrsid1388950 Barclays}{\f1\fs28\insrsid4851362 Bank of Uganda ltd., pursuant to section 112 of the }{\f1\fs28\insrsid5643608 F}{\f1\fs28\insrsid4851362 inancial }{\f1\fs28\insrsid5643608 I}{\f1\fs28\insrsid4851362 nstitutions Act, dated 18}{ \f1\fs28\super\insrsid4851362\charrsid4851362 th}{\f1\fs28\insrsid4851362 August 2007. In paragraph 11 she}{\f1\fs28\insrsid5643608 avers that Zzimwe Enterprises Hardware & C}{\f1\fs28\insrsid4851362 onstruction Ltd is and remains indebted to the Respondent in the sum of Ugshs2,211,653,283/05. \par \par The applicants did not file any affidavit in rejoinder. The above averments in Bir}{\f1\fs28\insrsid5643608 u}{\f1\fs28\insrsid4851362 ngis affidavit are neither denied nor contra}{\f1\fs28\insrsid8222941 di}{\f1\fs28\insrsid4851362 cted. The law is that where facts are sworn to in an affidavit and they are not denied or rebutted by the opposite party, the presum}{\f1\fs28\insrsid5643608 ption is that such facts are accep}{\f1\fs28\insrsid4851362 ted. See }{ \i\f1\fs28\ul\insrsid4851362\charrsid4851362 Massa Vs Achieng (1978) }{\i\f1\fs28\ul\insrsid5643608 HCB }{\i\f1\fs28\ul\insrsid4851362\charrsid4851362 297}{\f1\fs28\insrsid4851362 . The applicants\rquote only contention is that the guarantee documents do not relate to the Respondent}{\f1\fs28\insrsid5643608 \rquote }{\f1\fs28\insrsid4851362 s claim of Ugshs 2,211,653,283/05 and that they are not enforceable against them. In his submission Mr. Kavuma Kabenge argued that the guarantee documents were ex ecuted by the Applicants in relation to other borrowings from the Respondent which he contended had been retired. The }{\f1\fs28\insrsid5179893 Applicants did not in their respective affidavits show the borrowings to which their guarantees related. It is trite that an applicant h as a duly to put up a credible case. I am aware that at this stage court is not entitled to inquire into the merits of the issues raised. However, the court has a duty to study the grounds raised and ascertain whether they raise a real issue and not a sham one. See }{\i\f1\fs28\ul\insrsid5179893\charrsid5179893 Abubakar Kato Kasule Vs Tomson Mu}{\i\f1\fs28\ul\insrsid5643608 hwezi}{\i\f1\fs28\ul\insrsid5179893\charrsid5179893 (1992-199}{\i\f1\fs28\ul\insrsid5643608 7}{ \i\f1\fs28\ul\insrsid5179893\charrsid5179893 ) HCB 212}{\f1\fs28\insrsid5179893 .}{\f1\fs28\insrsid4851362 \par }{\f1\fs28\insrsid5179893 \par Mr}{\f1\fs28\insrsid10905965 . K}{\f1\fs28\insrsid5179893 avuma Kabenge argued that the Respondent}{\f1\fs28\insrsid14950034 \rquote }{\f1\fs28\insrsid5179893 s claim for Shs2,211,653,283/05 is based on a loan Agreement dated 15}{ \f1\fs28\super\insrsid5179893\charrsid5179893 th}{\f1\fs28\insrsid5179893 January 2007 yet the Guarantee deeds appear to have }{\f1\fs28\insrsid14950034 been }{\f1\fs28\insrsid5179893 executed sometime in 2005. H}{\f1\fs28\insrsid14950034 i}{ \f1\fs28\insrsid5179893 s contention i}{\f1\fs28\insrsid14950034 s}{\f1\fs28\insrsid5179893 that guarantees executed in 2005 could not be security for a loan facility granted in 2007. He made reference to loan agreement annexture A to the affidavit in reply filed by the Respondent in Miscellaneous Applic ation 114 of 2008 also arising from the same suit. Documents filed in the said application are }{\f1\fs28\insrsid14950034 documents on}{\f1\fs28\insrsid5179893 record in the same main suit so I cannot keep a blind eye to them}{\f1\fs28\insrsid14950034 . }{\f1\fs28\insrsid5179893 }{\f1\fs28\insrsid14950034 I}{\f1\fs28\insrsid5179893 n fact both counsel referred to them }{\f1\fs28\insrsid14950034 in their }{\f1\fs28\insrsid5179893 respective submissions. In the affidavit filed in reply by the }{ \f1\fs28\insrsid14950034 Respondent in}{\f1\fs28\insrsid5179893 application No. 114 the deponent explains the connection between the overdrafts secured by the Guarantees executed by }{\f1\fs28\insrsid14950034 the applicants}{\f1\fs28\insrsid5179893 and the loan }{\f1\fs28\insrsid10368564 agreement execut}{\f1\fs28\insrsid5179893 ed in 2007. Ms Bir}{\f1\fs28\insrsid11082597 u}{\f1\fs28\insrsid5179893 ngi therein states:- \par \par }\pard \qj \li567\ri567\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin567\lin567\itap0\pararsid2381322 {\f1\fs28\insrsid5179893 \'933. THAT between May 2005 and May 2006, the Applicant obtained three (3) separate }{ \f1\fs28\insrsid10905965 overdraft facilities}{\f1\fs28\insrsid5179893 from the then Nile Bank Ltd totalling Ugshs}{\f1\fs28\insrsid10368564 1,600,000,000/= (Uganda shillings one billion six hundred million only).}{\f1\fs28\insrsid5179893 \par }{\f1\fs28\insrsid10368564 4. --- \par --- \par }\pard \qj \fi567\li0\ri567\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin567\lin0\itap0\pararsid2381322 {\f1\fs28\insrsid13841511 6. }{\f1\fs28\insrsid10368564 THAT the Applicant defaulted }{\f1\fs28\insrsid11082597 i}{ \f1\fs28\insrsid10368564 n repayment of the }{\f1\fs28\insrsid13841511 \par }\pard \qj \li1080\ri567\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin567\lin1080\itap0\pararsid2381322 {\f1\fs28\insrsid10368564 facilities with the result that the said facilities were terminated. \par {\listtext\pard\plain\f1\fs28\lang2057\langfe1033\langnp2057\insrsid10368564 \hich\af1\dbch\af0\loch\f1 7.\tab}}\pard \qj \fi-360\li927\ri567\sl360\slmult1\widctlpar \jclisttab\tx927\aspalpha\aspnum\faauto\ls4\adjustright\rin567\lin927\itap0\pararsid2381322 {\f1\fs28\insrsid10368564 THAT at the time of termination of the facilities the amounts due on the Applicant}{\f1\fs28\insrsid11082597 \rquote }{ \f1\fs28\insrsid10368564 s overdraft account was Ugshs1,3000,000,000/= as principal and Ugshs300,000,000/= in interest. \par {\listtext\pard\plain\f1\fs28\lang2057\langfe1033\langnp2057\insrsid10368564 \hich\af1\dbch\af0\loch\f1 9.\tab}}\pard \qj \fi-360\li927\ri567\sl360\slmult1\widctlpar \jclisttab\tx927\aspalpha\aspnum\faauto\ls5\adjustright\rin567\lin927\itap0\pararsid2381322 {\f1\fs28\insrsid10368564 THAT at the special request of the Applicant, the then Nile Bank Limited restructured the facilities by converting the amounts into a loan of Ugshs1,600,000,000/= ( A copy of the Loan Agreement is attached and marked \'93A\'94}{\f1\fs28\insrsid11082597 )}{\f1\fs28\insrsid10368564 . Also attached hereto as \'93B\'94 is a letter from the Applicants\rquote counsel dated. January 25, 2008 acknowledging the conversion of the facilities from the overdraft account into a loan).\'94 \par }\pard \qj \li567\ri567\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin567\lin567\itap0\pararsid2381322 {\f1\fs28\insrsid10368564 \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2381322 {\f1\fs28\insrsid10368564 It is these same }{\f1\fs28\insrsid13055705 overdraft}{\f1\fs28\insrsid10368564 facilities in paragraph 3 above which Bir}{\f1\fs28\insrsid11082597 u}{\f1\fs28\insrsid10368564 ngi also avers to in paragraph 3 of her affidavit in reply of the }{\f1\fs28\insrsid13055705 instant}{\f1\fs28\insrsid10368564 application and for which she avers }{\f1\fs28\insrsid11082597 that }{\f1\fs28\insrsid13055705 the Applicants individually executed the unlimited Guarantees in favour of Nile Bank Limited. I have already found that her above averment on }{ \f1\fs28\insrsid11082597 oath }{\f1\fs28\insrsid13055705 are neither denied nor rebutted o}{\f1\fs28\insrsid11082597 n}{\f1\fs28\insrsid13055705 oath by the Applicants. The loan agreement in paragraph 1 (b) sta}{\f1\fs28\insrsid11082597 t}{ \f1\fs28\insrsid13055705 es:-}{\f1\fs28\insrsid10368564 \par }{\f1\fs28\insrsid13055705 \par }\pard \qj \li567\ri567\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin567\lin567\itap0\pararsid2381322 {\f1\fs28\insrsid13055705 \'93 This agreement is to be in addition to and not to be derogation from other agreements between the Borrower and the Bank in connection with this loan and other advances.\'94 \par \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2381322 {\f1\fs28\insrsid13055705 The loan was secured among others by securities indicated in paragraph 2 as \'93Held}{\f1\fs28\insrsid11082597 \'94 which included}{\f1\fs28\insrsid13055705 : \par \par }\pard \qj \li720\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid2381322 {\f1\fs28\insrsid11082597 \'93(vi)P}{\f1\fs28\insrsid13055705 ersonal guarantees from the company directors\'94 \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2381322 {\f1\fs28\insrsid13055705 \par I find the \'93other advances\'94 referred to in the loan Agreement to be the overdraft facilities as per the letter annextures \'93A1\'94}{\f1\fs28\insrsid1472136 ,}{\f1\fs28\insrsid13055705 \'93A2\'94 and \'93A3\'94 to the plaint and the }{ \f1\fs28\insrsid1472136 \'93}{\f1\fs28\insrsid13055705 held}{\f1\fs28\insrsid1472136 \'94}{\f1\fs28\insrsid13055705 personal guarantees to be the guarantees annexture \'93B1\'94 and \'93B2\'94 to the plaint. \par \par Therefore I agree with Mr. Kasirye\rquote s submission that the Respondent has explained the transformation from the overdrafts facilities secured }{\f1\fs28\insrsid1472136 in}{\f1\fs28\insrsid6036993 2005 by the personal guarantees of the company directors, who are the Applicants, into a loan facility secured, inter alia, by the same personal guarantees from the Applicants }{\f1\fs28\insrsid1472136 as }{\f1\fs28\insrsid6036993 per the loa n Agreement dated 15}{\f1\fs28\super\insrsid6036993\charrsid6036993 th}{\f1\fs28\insrsid6036993 January 2007. Each of the guarantee deeds, in paragraphs 2, provided that the guarantee shall be a continuing security. The }{\f1\fs28\insrsid1472136 A}{ \f1\fs28\insrsid6036993 pplicants}{\f1\fs28\insrsid1472136 \rquote }{\f1\fs28\insrsid6036993 personal guarantees to the overdraft facilities were kept alive by the Loan Agreement.}{\f1\fs28\insrsid13055705 \par }{\f1\fs28\insrsid6036993 \par As regards demand in respect of the guarantees the Respondent in paragraph 7 of Bir}{\f1\fs28\insrsid1472136 u}{\f1\fs28\insrsid6036993 ngi\rquote s affidavit states that demand was served upon the Applicants in November 2007. Annexture A is a letter dated 16}{\f1\fs28\super\insrsid6036993\charrsid6036993 th}{\f1\fs28\insrsid6036993 }{\f1\fs28\insrsid1472136 November 2007 addressed to the M}{ \f1\fs28\insrsid6036993 anaging Director, Zzimwe Enterprises Hardware and Construction Ltd, where in the respondent demands payment. The letter is among other}{\f1\fs28\insrsid1472136 s}{\f1\fs28\insrsid6036993 copied to Mr. John Andrew Kasagga and Paul Semugoma Kasagga, who are the }{\f1\fs28\insrsid1472136 A}{\f1\fs28\insrsid6036993 pplicants. It states: \par }\pard \qj \li567\ri567\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin567\lin567\itap0\pararsid2381322 {\f1\fs28\insrsid6036993 \par \'93By copy hereof M/s Joka Investments and Mr. }{\f1\fs28\insrsid1472136 J}{\f1\fs28\insrsid6036993 ohn Andrew Kasagga}{\f1\fs28\insrsid1472136 ,}{\f1\fs28\insrsid6036993 Mrs Josephine Kasagga Nalubale and Mr Paul Semugoma Kasagga, all being guarantees of Zzimwe Enterprises Hardware and Construction Limited }{\f1\fs28\insrsid1472136 are}{\f1\fs28\insrsid6036993 hereby put on notice of intended enforcement of their respective guarantees\'94 \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2381322 {\f1\fs28\insrsid13984770 \par Receipt of this letter is not denied by any of the Applicants. }{\f1\fs28\insrsid1472136 I}{\f1\fs28\insrsid13984770 therefore find that demand in respect of each of the Applicant}{\f1\fs28\insrsid1472136 \rquote }{\f1\fs28\insrsid13984770 s guarantee was made and received. \par \par }{\f1\fs28\insrsid12341069 Considering}{\f1\fs28\insrsid13984770 all the above }{\f1\fs28\insrsid12341069 I find that the Applicants have failed to put up a plausible defence. The iss ues raised are a sham. It must however be appreciated that the Applicants were guarant}{\f1\fs28\insrsid1472136 or}{\f1\fs28\insrsid12341069 s to a facility advanced by the Respondent to M/s Zzimwe Enterprises Hardware and Construction Ltd, the first defendant in the main suit. In Miscellaneous Application No 114 of 2008 M/s Zzimwe Enterprises Hardware and construction Ltd }{ \f1\fs28\insrsid12218467 disputed}{\f1\fs28\insrsid12341069 the sum of Shs2,211,653.283/05 claimed as owing and due by the Respondent in the main suit. Zzimwe Enterprises Hardware and }{\f1\fs28\insrsid1472136 C}{\f1\fs28\insrsid12341069 onstruction Ltd, who is the principle debtor, has in that application been granted leave to appear and defend so as to enable this court determine inter parties the amount due under the loan. }{\f1\fs28\insrsid13984770 \par }{\f1\fs28\insrsid12341069 \par A guarantee is a contract whereby a person contracts with another to pay a debt of a third party who notwithstanding remains p}{\f1\fs28\insrsid1472136 rimarily}{\f1\fs28\insrsid12341069 liable for such payment. See }{ \i\f1\fs28\ul\insrsid12218467\charrsid8222941 Encyclopaedia}{\i\f1\fs28\ul\insrsid12341069\charrsid8222941 of Fo}{\i\f1\fs28\ul\insrsid1472136\charrsid8222941 rm}{\i\f1\fs28\ul\insrsid12341069\charrsid8222941 and }{ \i\f1\fs28\ul\insrsid12218467\charrsid8222941 Precedents 4}{\i\f1\fs28\ul\super\insrsid12218467\charrsid8222941 th}{\i\f1\fs28\ul\insrsid12218467\charrsid8222941 Ed page 761}{\f1\fs28\insrsid12218467 . The guarantor\rquote s liability for the non performance of the principle debt}{\f1\fs28\insrsid8222941 or}{\f1\fs28\insrsid12218467 s\rquote obligation is co-exten}{\f1\fs28\insrsid1472136 siv}{\f1\fs28\insrsid12218467 e with that obligation. In the instant case t he applicant\rquote s individual liability as guarantors is co-extensive with M/s Zzimwe Enterprises Hardware and Construction Ltd\rquote s obligation. If the principle debtor}{\f1\fs28\insrsid8222941 \rquote }{\f1\fs28\insrsid12218467 s obligation turns out not to exist or is void or diminished or discharged so is the guarantor\rquote s obligation in respect of it. Pending court}{\f1\fs28\insrsid8222941 \rquote }{\f1\fs28\insrsid12218467 s determination of the extent of M/s Zzimwe Enterprises }{\f1\fs28\insrsid1472136 H}{\f1\fs28\insrsid12218467 ardware and Constructors Ltd\rquote s indebtedness to the Respondent, the extent of the Applicants\rquote liability as Guarantors remains undetermined. A guarantee obligation is secondary and accessory to the obligation the performance of which is guaranteed. The guarantor undertakes that the principal}{\f1\fs28\insrsid1472136 debtor will p}{ \f1\fs28\insrsid12218467 e}{\f1\fs28\insrsid2950703 r}{\f1\fs28\insrsid12218467 f}{\f1\fs28\insrsid1472136 orm}{\f1\fs28\insrsid12218467 his obligation to the creditor and that the guarantor will be liable to the creditor if the principal debtor does not perform. }{\f1\fs28\insrsid12341069 \par }{\f1\fs28\insrsid3154709 \par The circumstances of this application dictate th}{\f1\fs28\insrsid1662128 at its practical effect cannot}{\f1\fs28\insrsid1472136 b}{\f1\fs28\insrsid1662128 e separated from that of Miscellaneous Application No. 114 of 2008. Under section 98 of the Civil Procedure Act this Honourable Court has unlimited in}{\f1\fs28\insrsid1472136 herent}{\f1\fs28\insrsid1662128 power to make such orders as may be }{ \f1\fs28\insrsid16008719 necessary}{\f1\fs28\insrsid1662128 for the ends of Justice or t}{\f1\fs28\insrsid1472136 o}{\f1\fs28\insrsid1662128 prevent abuse of the process of Court. \par \par }{\f1\fs28\insrsid9655557 So i}{\f1\fs28\insrsid1662128 n the final result I make the following orders:- }{\f1\fs28\insrsid3154709 \par }{\f1\fs28\insrsid1662128 \par {\listtext\pard\plain\f1\fs28\lang2057\langfe1033\langnp2057\insrsid16008719 \hich\af1\dbch\af0\loch\f1 1.\tab}}\pard \qj \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls3\adjustright\rin0\lin720\itap0\pararsid2381322 { \f1\fs28\insrsid16008719 T}{\f1\fs28\insrsid1662128 he }{\f1\fs28\insrsid9655557 A}{\f1\fs28\insrsid1662128 pplicants}{\f1\fs28\insrsid9655557 \rquote }{\f1\fs28\insrsid1662128 application }{\f1\fs28\insrsid16008719 to appear and defend Civil Suit No 51 of 2008 is dismissed. }{\f1\fs28\insrsid1662128 \par {\listtext\pard\plain\f1\fs28\lang2057\langfe1033\langnp2057\insrsid16008719 \hich\af1\dbch\af0\loch\f1 2.\tab}}{\f1\fs28\insrsid16008719 The Respondent is not to exercise its rights to recover from the Applicants, as guarantors, unt}{ \f1\fs28\insrsid9655557 il}{\f1\fs28\insrsid16008719 the 1}{\f1\fs28\super\insrsid16008719\charrsid16008719 st}{\f1\fs28\insrsid16008719 Defendant}{\f1\fs28\insrsid8222941 \rquote }{\f1\fs28\insrsid16008719 s indebtedness is determined in Civil Suit No. 51 of 2008. \par {\listtext\pard\plain\f1\fs28\lang2057\langfe1033\langnp2057\insrsid16008719 \hich\af1\dbch\af0\loch\f1 3.\tab}Each party shall, in the circumstances, bear its own costs. \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2381322 {\f1\fs28\insrsid16008719 \par \par \par }{\f1\fs28\insrsid2381322 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16008719 {\f1\fs28\insrsid16008719 \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10905965 {\f1\fs28\insrsid16008719 Hon Mr. Justice Lameck N. Mukasa \par }{\b\f1\fs28\insrsid10905965\charrsid10905965 JUDGE}{\b\f1\fs28\insrsid16008719\charrsid10905965 \par }{\f1\fs28\insrsid16008719 22}{\f1\fs28\super\insrsid16008719\charrsid16008719 nd}{\f1\fs28\insrsid16008719 August 2008 \par \par \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13055705 {\f1\fs28\insrsid3154709 \par }{\f1\fs28\insrsid12341069 \par \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15487367 {\f1\fs28\insrsid15487367 \par \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\insrsid6754790 \par }}