[2021] UGCommC 67
The court found that the plaintiff had established, through unchallenged evidence, that the defendant was liable for the outstanding debt under the deed of undertaking and corporate guarantee. The defendant's failure to remit the borrower's terminal benefits or settle the guaranteed facility, despite repeated...
Source-derived case information.
- Citation
- [2021] UGCommC 67
- Parties
- Plaintiff: Housing Finance Bank Limited; Defendant: MTK Uganda Limited
- Court
- Commercial Court of Uganda
- Jurisdiction
- Uganda
- Case Number
- Civil Suit No. 15 of 2021
- Procedural Posture
- Civil Suit / Judgment
- Outcome
- Judgment entered for the plaintiff.
- Judges
- Gaswaga, J
- Legal Topics
- Loan Recovery, Corporate Guarantees, Debt Enforcement
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Housing Finance Bank Limited
Plaintiff
MTK Uganda Limited
Defendant
Procedural Posture
Civil Suit / Judgment
Legal Issues
- 1 Whether the defendant is liable to pay the outstanding loan amount under the deed of undertaking and corporate guarantee.
- 2 Whether the plaintiff is entitled to interest and costs as claimed.
Ratio Decidendi
The court found that the plaintiff had established, through unchallenged evidence, that the defendant was liable for the outstanding debt under the deed of undertaking and corporate guarantee. The defendant's failure to remit the borrower's terminal benefits or settle the guaranteed facility, despite repeated demands and the absence of any defence, entitled the plaintiff to judgment for the claimed sum, interest, and costs. The court relied on the binding nature of the guarantee and the procedural consequence of the defendant's failure to obtain leave to defend under Order 36 rule 5 CPR.
Court Disposition
Judgment entered for the plaintiff.
Orders
- The defendant shall pay the plaintiff Ugx 207,326,980.23.
- Interest at 23% per annum from the date of default until payment in full is awarded to the plaintiff.
Full Case Text
Judgment text and source record
18 paragraphs
# **THE REPUBLIC OF UGANDA**
## **IN THE HIGH COURT OF UGANDA AT KAMPALA**
### **[COMMERCIAL DIVISION]**
## **Civil Suit No.15 of 2021**
# **HOUSING FINANCE BANK LIMITED::::::::::::::::::::::.:PLAINTIFF**
### **VERSUS**
**MTK UGANDA LIMITED:::::::::::::::::::::::::::::::::::::DEFENDANTS**
### **BEFORE; HON. JUSTICE DUNCAN GASWAGA**
### **JUDGMENT**
- [1] This is a judgment on a claim for recovery of a liquidated sum of Ugx 207,326,980.23 (Uganda Shillings two hundred seven million three hundred twenty-six thousand Nine Hundred Eighty and Twenty-three cents) with interest and costs of the suit. - [2] The cause of action arose as follows; that the plaintiff granted the late Francis Xavier Kitaka Ssebampitako a credit facility of Ugx 250,000,000 for thirty-six months on 28/01/2019 and the borrower was required to pay the loan in equal monthly instalments of Ugx 9,290,896/=. The defendant consequently issued to the bank a deed of undertaking on 29/01/2019 wherein it committed to immediately remit the borrower's terminal benefits at the date of termination of employment with it in settlement of outstanding loan obligations and accrued interest. Further, on 04/03/2019 the defendant issued in favour of the bank a corporate guarantee that the defendant would on demand pay to the bank all moneys and discharge all debt obligations
of the deceased. However, since the death of the borrower the defendant has not remitted the borrower's terminal benefits to the bank despite various demands. The plaintiff issued a demand notice to the defendant on 24/11/2020 for the borrower's terminal benefits and also made a call on the guarantor to pay the guaranteed facility which has been ignored to date.
- [3] It should be noted that the defendants applied for leave to appear and defend vide M. A No. 62 of 2021 which was dismissed for failure to disclose any triable issues or reasonable grounds of defence. As such the main suit was left un defended. - [4] Order 36 rule 5 CPR states thus;
### *Judgment upon refusal to give leave.*
*Where, after hearing an application by a defendant for leave to appearand defend the suit, the courtrefuses to grant such leave, the plaintiff shall be entitled as against the defendant to a decree such as is described in rule 3 ofthis Order.*
[5] <sup>I</sup> have had opportunity once again to peruse the pleadings. <sup>I</sup> find that the evidence on record clearly establishes a debt of Ugx 207,326,980.23(Uganda shillings two hundred seven million three hundred twenty-six thousand nine hundred eighty and twenty-three cents) owed by the defendants as per the deed of undertaking and deed of corporate guarantee. The debt is not challenged.
**[6] Accordingly, <sup>I</sup> hereby enterjudgment against the defendant in the sum of Ugx 207,326,980.23(Uganda shillings two hundred seven million three hundred twenty-six thousand nine hundred eighty and twenty-three cents) plus interest at 23% per annum from the date of default till payment in full. The defendant shall also pay costs of the suit to the plaintiff.**
**Dated, signed and delivered at Kampala this 30th day of April, 2021**
**w. Duncan Ggswaga JUDGE**