THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
COMMERCIAL COURT DIVISION
(ARISING FROM HCT-00-CC-CS-0051 – 2008)
ANDREW KASAGGA ……………..…….. ……….…….. APPLICANT
BARCLAYS BANK (U) LTD …………………..……..… RESPONDENT
BEFORE: HON MR. JUSTICE LAMECK N. MUKASA
(c) That the applicants be granted unconditional leave to appear and defend the main suit.
(d) Costs of this application be born by the respondent
2. That the court record shows that the applicants were sued as guarantors whose liability only arises upon ascertaining of the true and or actual amount payable between the plaintiff and the Defendant Company which was being contested.
3. That the procedure adopted required issuance of a decree upon refusal of leave to defend which could not be as there were no amount established to be due.
4. That the applicants could not file a defence because the court did not allow them to do so.
5. The order of court determining liability of the applicants as guarantors for an undetermined sum of money is an error apparent on the face of the record.
6. That the applicants have been denied audience before court yet the matters in contention are set to determine their liability or right, thereto.
7. That it is just and equitable that a review be granted in the circumstances.
8. That the applicants be permitted to file a decree.
As was said in the AIR Commentaries on the Code of Civil Procedure by Chitaly and Rao (4 ed) Volume 3 at 3227: ‘A point which may be a good ground of appeal may not be a ground for an application for review. Thus an erroneous view of evidence or of law is no ground for review though it may be good ground for an appeal.”
Ms Zzimwe Hardware & Construction Enterprises Ltd., vide Miscellaneous Application No. 0114 of 2008, applied for leave to defend the above suit. It disputed the sum of shs2,211,653,282/05 contending that the amount due is only Shs663,182,701/=. Leave to defend was granted for court to determine the amount actually due to the Respondent.
The applicants also, vide Miscellaneous Application 0113 of 2008, applied for leave to defend the above suit on the grounds, inter alia, that:-
(b) The guarantee documents attached to the plaint are not related to the Respondents claim of Ugshs2,211,653,287/05 and are not enforceable against the applicants.
(c) There has been no demand by the Respondent in respect of any guarantees.
This court found that the attached guarantee documents related to the claim and that there had been appropriate demand. It accordingly dismissed the application.
I have carefully considered the able submissions of both Counsel and I find that the Applicant’s case is that by rejecting their application for leave to defend their liability was prejudged. The applicants contend that the order of court determining their liability as guarantors for an undetermined sum of money is an error apparent on the face of the record.
I have reviewed the main application and have discovered that the issue of the Applicant’s liability which they were contesting in that application was not considered. As observed in the Ruling in the main application a guarantee obligation is secondary and accessory to the obligation the performance of which is guaranteed. The Applicant’s liability as guarantors is co-existence with Ms Zzimwe Hardware and Construction Enterprises Ltd’s obligation as the principle debtor. If its obligation turns out not to exist or is void or dismissed or discharged so is the Applicant’s obligation in respect thereof. The liability of the guarantor arises only upon the default of the principle debtor and limited to the extent of the default. The extent of default and liability of the principle debtor and thus that of the guarantors is in issue. In light of that I find that it was an error apparent on the record not to allow the applicants to defend and ascertain the extent of their liability to the Respondent.
In the premises the application for review succeeds. The order is accordingly reviewed and the Applicants are allowed to appear and defend Civil Suit No 51 of 2008. They must file a Written Statement of Defence within fourteen days from the date of this ruling. Costs shall be in the course of the main suit.
I so order.
Hon. Mr. Justice Lameck N. Mukasa
16th June 2009