THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

CIVIL SUIT NO. 637 OF 2013

5 IMPERIAL BANK (U) LIMITED --------------------------PLAINTIFF

VS

1) T- BRUCKS EAST AFRICA LIMITED

2) GHULAM RAZA

3) MUHAMMAD OVASI SIDDIQUI ------------------- DEFENDANTS

10

BEFORE LADY JUSTICE FLAVIA SENOGA ANGLIN

JUDGMENT

BRIEF FACTS:

By agreement dated 06.07.12, the Plaintiff and the First Defendant

15 entered into a loan agreement of Shs. 250,000,000/- with interest at the
rate of 27% per annum. The loan was repayable in 24 months in 24
monthly installments. The loan was taken by the Defendants for
acquiring two Mack Tracks. It was secured by motor vehicles
Registration Nos. UAQ 267Z, UAQ 129T, UAB 622M, 192 Doll Semi
20 Trailer and two Mack Tracks.

On 09.08.12, the 2nd and 3rd Defendants executed unlimited personal

guarantees in favor of the Plaintiff, agreeing to pay the principal sum
and accrued interest in event of default by the 1st Defendant.

1
 The First Defendant defaulted on the loan repayment and the
Defendants were served with notice to remedy the default, which they
failed to do; hence this suit.

The Plaintiff seeks general damages for breach of contract, recovery of

5 the unpaid loan balance of Shs. 272,225,225/- together with accrued
interest and costs of the suit, interalia.

In their defence, the Defendants denied some of the claims in the plaint,
contending that the Plaintiff would be put to strict proof thereof.

Further that, they would adduce evidence to show that the Plaintiff is
10 not entitled to the remedies sought.

It was also the claim of the Defendants that the Plaintiff had no cause of
action against the 2nd and 3rd Defendants as the loan was duly secured
before it was advanced. They prayed for the dismissal of the suit with
costs.

15 At the scheduling conference, it was agreed that the First Defendant

applied for the loan facility of Shs. 250,000,000/- at the interest rate of
27% per annum; the 2nd and 3rd Defendants guaranteed repayment of
the principal sum and accrued interest in the event of default by 1st
Defendant; that the 1st Defendant defaulted on the loan repayment and
20 that the 2nd and 3rd Defendants are both Directors of the 1st Defendant.

The following were the agreed issues:-

1) Whether the Defendants breached the terms of the loan agreement.

2) Whether the 2nd and 3rd Defendants are liable to repay the loan as
guarantors;

25 3) What remedies are available to the parties.

2
 The case was fixed for hearing but after a number of adjournments,
Counsel for the Plaintiff informed court on 24.08.15 that, he had agreed
with Counsel for the Defendants that Court should be moved to enter
judgment on admission, to bring on an early closure to the suit; which
5 he did. Counsel for the Defendants confirmed to court that, that was
the agreed position.

Judgment on admission was entered against all Defendants, and parties

were directed to file written submissions.

It was the submission of Counsel for the Plaintiff that judgment on

10 admission was entered under S.98 CPA and 0.13 r 6 C.P.R that the
Defendants breached the terms of the loan agreement the 2nd and 3rd
Defendants are liable for the repayment of the loan and that Plaintiff is
entitled to the reliefs sought.

Counsel went through the facts of the case already referred to and the
15 provisions of 0.13r6 C.P.R. He also cited S.16 of the Evidence Act which
defines admission.

He then emphasized that the facts admitted in the joint written

statement of defence and the scheduling memorandum insisting that,
the Defendants guaranteed repayment of the loan. He cited paragraph
20 1.1 of the loan agreement Annexture “B” and “C” to the plaint and
paragraph 21.

Contending that there is no doubt that the 2nd and 3rd Defendants took
full liability to repay the loan, Counsel stated that the court is enjoined
to enter judgment on admission under S.57 of CPA and 0.13 r 6 C,P.R.

3
 Counsel relied on Mulla Code of Civil Procedure 6th Edition Vol.2,
P.2177 and the case of Natha vs. Jodha (1884) 6 ALL 406 to define
actual and constructive admissions.

And the case of Godfrey Lule vs. Attorney General CACA

5 No.2/2000 and the case of Kamugisha Lennard vs. Uganda
Revenue Authority HCCS No. 311/2012 for the holding that 0.13 r
6 C.P.R entitles a party to judgment on the facts of the case admitted by
the opposite party.

The application may be made at any stage of the suit and without
10 prejudice to the determination of any other question between the
parties and the rule gives court discretionary power to enter judgment
as the court may think just. It is now trite law that “an adm ission has
to be unequivocal and m ust adm it a claim in the suit”.

It was the further contention of Counsel that the glaring admission in

15 the joint scheduling memorandum conclusively determines and answers
all the issues raised in this case.

He then prayed court to find that the Defendants breached the terms of
the loan agreement and that the 2nd and 3rd Defendants are liable for
repayment of the loan, thus entitling the Plaintiff to the reliefs prayed
20 for.

In reply, Counsel for the Defendants submitted that for judgment to be

entered on admission, the admission must be unequivocal –
Kamugisha vs. Uganda Revenue Authority (Supra).

That in this case, the alleged admitted facts do not amount to an

25 admission since they are denied under the Defendants facts in the same

4
 scheduling memorandum, thus making the matter eligible for trial. That
the admission is not unequivocal as provided for under the law.

He pointed out that the 2nd and 3rd Defendants are contesting their trial
as Directors of the 1st Defendant before disposing off the securities
5 mortgaged to the Bank in case of default by the 1st Defendant.

That without an unequivocal admission of liability, the 2nd and 3rd

Defendants cannot be held liable at this stage before the Plaintiff has
extinguished all possible efforts to recover from the 1st Defendant.

He prayed that the application be dismissed with costs to the

10 Defendants.

Under S.57 of the Evidence Act, once facts are agreed or admitted, they
are no longer in dispute and are put out of the scope of the parties
litigation. The section provides that “no fact need be proved in any
proceedings w hich the parties to the proceedings or their
15 agents agree to adm it at the hearing, or w hich, before the
hearing, they agree to adm it by any w riting under their hands,
or w hich by any rule of pleadings in force at the tim e they are
deem ed to have adm itted by their pleadings; except that the
court m ay, in its discretion, require the facts adm itted to be
20 proved otherw ise than by such adm issions”.

Refer also to the case of Kampala District Land Board and Another
vs. National Housing and Construction Co. Ltd SCCA No.
02/2004 where it was held interalia that “Under S.56 (now 57) of
the Evidence Act, facts once adm itted need no further proof and
25 are no longer in issue”.

5
 In the present case, the Defendants under paragraphs 1 and 3 of the
written statement of defence made general demands without traversing
the allegations leveled against them by the Plaintiff.

During the scheduling conference, the parties through their Counsel in

5 the joint scheduling memorandum filed in court on 31.1.14, the parties
under the sub heading “Agreed facts” agreed that:-

1) The 1st Defendant applied for a loan facility of Shs. 250,000,000/- at

an interest rate of 27% per annum.

2) The 2nd and 3rd Defendants guaranteed the repayment of the

10 principal sum and accrued interest in the event the 1st Defendant
defaulted.

3) The 1st Defendant defaulted on the loan; and that

4) The 2nd and 3rd Defendants are both directors of the 1st Defendant
Company.

15 The following were agreed issues:-

1) Whether the Defendants breached the terms of the loan agreement;

2) Whether the 2nd and 3rd Defendants are liable for the loan as
guarantors; and

3) What remedies are available to the parties.

20 Under 0.12 r (1) (1) C.P.R and as established by the holding in the case
of Tororo Cem ent Co. Ltd vs. Frokina I nternational Ltd SCCA
No.02/ 2001 “the purpose of a scheduling conference is to sort
out issues of agreem ent and disagreem ent by the parties, so
that those that are not disputed need not be litigated over”.

6
 It is apparent from the joint scheduling memorandum of the parties
there were no disagreed facts.. The issues were framed from the
agreed facts; there was therefore no need to litigate over the issues.

The Defendants cannot be heard to claim that they made admission

5 without knowledge of the facts, so as to contend that the facts had little
evidential value as per the case of Comptroller of Customs vs.
Western Electric Co. Ltd [1966] AC 367.

This is because Counsel for the Defendants who prepared the joint
scheduling memorandum had full instructions to represent the
10 Defendants as the Defendants’ Advocates and had full knowledge of the
facts admitted – 0.3 r 1 C.P.R.

The admissions made were of facts and not of law- See the case of
Ashmore vs. Corporation of Llyods [1992] IWLR 446.

Admissions of fact, as already indicated herein, are admissible. Further

15 “the adm ission has to be clear and unam biguous and m ust state
precisely w hat is being adm itted” – Refer to the case of John
Peter Nazareth vs. Barclays Bank International Ltd [1976] EA
39 - which is to the effect that “for a judgm ent to be entered on
adm ission, such an adm ission m ust be explicit and not open to
20 doubt”.

In the present case a look at the Defendant’s written statement of

defence shows that the grounds alleged in the plaint were only generally
denied by the Defendants. Yet 0.6r8 C.P.R requires that “each party
m ust deal specifically w ith each allegation of fact of w hich he
25 or she does not adm it the truth except dam ages”.

7
 In such circumstances, “the Defendant cannot be given leave to
call evidence since in the w ritten statem ent of defence there
w as no specific denial” – See Joshua vs. Uganda Sugar Factory
[1968] EA 570 AT 572 Spry J.A.

5 Also 0.6 r 10 C.P.R provides that “w hen a party in any pleading

denies an allegation of fact in the previous pleadings of the
opposite party, the denial m ust not be done evasively, but m ust
answ er the point of substance. For ex am ple, it is alleged that a
certain sum of m oney w as received, it shall not be sufficient to
10 deny receiving that particular or any part thereof, how m uch
w as received should be indicated. And if the allegation is m ade
w ith divers circum stances, it shall not be sufficient to deny it
along w ith those circum stances”.

In the present case, the Defendants in paragraphs 5-7 of the written

15 statement of defence made evasive denials when they stated that : (5)
in further reply to the whole claim of the Plaintiff, the Defendant shall
contend and adduce evidence to the effect that the Plaintiff is not
entitled to any of the remedies sought.

(6) the 2nd and 3rd Defendants shall aver and adduce evidence to the
20 effect that the Plaintiff has no cause of action against them and the suit
against them is totally premature; and (7) The Defendants shall further
adduce evidence to the effect that the loan was duly secured and the
Plaintiff accepted the securities availed to it before the loan was
advanced.

25 This is what was also stated in the scheduling memorandum as the

Defendants’ brief facts.

8
 According to the principle established by case law, “for a denial to be
effective, it m ust am ount to a denial of liability for all tim es and
all purposes” - Refer to Bank of Baroda vs. Mahomed [1999]
LLoyds Rep 14.

5 As already set out in this judgment, the Defendants denial in the present
case was evasive contrary to 0.6 rr8 and 10 C.P.R. This means that, the
defence was an implied admission of the material facts as set out by the
Plaintiff and this is supported by the joint scheduling memorandum.

“Agreed facts”

10 It is trite law that, once an admission of facts is made, court may upon
application by either party to the case make such order or files such
judgment without waiting for the determination of any other question
between the parties. – 0.13 r 6 C.P.R.

The rule was discussed in the case of Luka Matovu & Others vs.
15 Attorney General MA 143/2008 (Arising from HCCS 248/2003)
where Justice Musoke Kibuuka stated that “in a persuasive judgm ent
of the Court of Appeal of Kenya in Agricultural Finance
Corporation vs. Kenya National I nsurance Corporation, Civil
Appeal No. 271 of 1996, the court took the view that “w here
20 adm ission is not am biguous, the court ceases to have a
discretion w hether to enter judgm ent or not. I t m ust do so”.

See also the case of Kamugisha Lennard vs. Uganda Revenue

Authority HCCS No. 311/2012.

In the present case, the Defendants agreed to and admitted all material
25 facts in the Plaintiff’s claim in the joint scheduling memorandum,
therefore, there remaining no triable issues for this court to consider.
9
 Triable issues would only have arisen under 0.15 r 1 (1) (2) and (3)
C.P.R if any material propositions of law or fact were affirmed by one
party and denied by the other.

“An adm ission is the best piece of evidence that the opposite
5 party can rely upon, though not conclusive, is decisive of the
m atter, unless successfully w ithdraw n or proved erroneous”.

Having found that the admission of the Defendants in this case was
unambiguous, I agree with the submissions of Counsel for the Plaintiff
that it binds the Defendants and cannot be litigated upon by virtue of
10 S.57 Evidence Act, 0.6 rr 8 and 18, 0.12 r 1, 0.13 r 6 and 0.15 r 1 (1),
(2) and (3) C.P.R.

The arguments of Counsel for the Defendants that the Defendants did
not unequivocally admit liability as alleged by the Plaintiff are
accordingly rejected. There was no indication anywhere that the facts
15 agreed to in the joint scheduling memorandum were made under
mistaken belief, or were erroneous. And no application to withdraw the
admissions was made. “W hat a party adm its to be true by
him self/ herself or through the Advocate cannot be construed
otherw ise by court”.

20 It was the further submission of the Defendants’ Counsel that the 2nd
and 3rd Defendants cannot be held liable at this stage before the Plaintiff
has extinguished all possible efforts to recover from the 1st Defendant.

However, the 2nd and 3rd Defendants admit that there was a contract of
guarantee between them and the Plaintiff.

25 A “contract of guarantee” is defined under S.68 of the Contracts Act,

to mean, “a contract to perform a prom ise or to discharge
10
 liability of a third party in case of default of that third party,
w hich m ay be oral or w ritten”.

The 2nd and 3rd Defendants in this case executed unlimited personal
guarantees in favor of the Plaintiff.

5 - Looking at Annextures “B” and “C” to the plaint paragraph 1.1 it

states “ in consideration of the Bank granting or continuing to
m ake available banking facilities – to T-Brucks East Africa
Ltd (hereinafter referred to as the “The Borrow er”) the
guarantors hereby personally guarantee on dem and to pay to
10 the Bank the principal guaranteed am ount of up to Ug X
250,000,000/ - (Uganda Shillings Tw o Hundred and Fifty
M illion only) and all other m oneys falling due there under or
under any finance docum ent or credit facility availed to the
Borrow er, and discharge all obligations and liabilities
15 w hether actual or contingent now or at any tim e thereafter
due, ow ing or incurred to the Bank by the Borrow er… . Any
statem ent of account of the Borrow er signed as correct by
any duly authorized Officer of the Bank shall be conclusive
evidence against the Guarantors of the indebtedness of the
20 Borrow er to the Bank”.

The two guarantees were listed in the scheduling memorandum as No2

for Plaintiffs and No. for Defendants. The 2nd and 3rd Defendants
admitted executing the guarantees in favor of the Plaintiff.

Under S.71 (2) of the Contracts Act, “the liability of the guarantor
25 takes effect upon default by the principal debtor”.

11
 The principal debtor in the present case the 1st Defendant defaulted on
repayment of the loan.

The guarantee of the 2nd and 3rd Defendant created a primary obligation.
“A prim ary obligation is im posed on the guarantor to actually
5 pay in the event of default by the guaranteed party under the
prim ary conduct”. If it had been a second obligation created it would
have instead imposed an obligation on the guarantor to ensure that the
guaranteed party will honor its obligations in the loan family. That is,
the guarantor would have been requested “to see to it” that the debtor
10 performs.

The primary obligations is for guarantor to pay the money and failure of
which entitles the creditor to sue the guarantor for the sum of money.
While in the case of the secondary obligation the creditors is only
entitled to sue for damages for breach of that obligation by the
15 guarantor”. - See Moschi Vs. Lep Air Services [1973] AC 331 Lord
Reid.

Since as I have already indicated in this judgment that the 2nd and 3rd
Defendants created a primary obligation to re-pay the 1st Defendants
loan amount plus accrued interest, they became obliged to pay the sums
20 guaranteed immediately after the 1st Defendant defaulted.

It follows therefore that they can be held liable at this stage. All three
Defendants were sued jointly and severally after demand for payment
was made as per Annexture “E” and they failed to respond to the
demand.

12
 It is for all those reasons that the Plaintiff’s application for judgment on
admission is allowed under 0.13 r 2 C.P.R and judgment is entered as
prayed in the plaint.

The issue of general damages and costs of the suit was not addressed
5 by Counsel for the Plaintiff. However, under 0.8r4 C.P.R- “no denial or
defence shall be necessary as to dam ages claim ed or their
am ount; but they shall be deem ed to be put in issue in all
cases, unless ex pressly adm itted”

It is trite law that the intention of law in awarding general damages for
10 breach of contract is that “the party com plaining should, so far as
it can be done by m oney, be placed in the sam e position as
he/ she w ould have been if the contract had been perform ed”.

And according to the case of Hajji Asuman Mutekanga vs. Equator

Growers (U) Ltd, SCCA No 07/1995 [1996] III KALR 70 at 83
15 “general dam ages in breach of contract are w hat a court m ay
aw ard w hen it cannot point out any m easure by w hich they are
to be accessed ex cept the opinion and judgm ent of a
reasonable m an”.

Although Counsel for the Plaintiff and of the Defendants did not submit
20 on the aspect of general damages as already indicated that are deemed
to be put in issue under 0.8r4 C.P.R and thus court will determine the
issue relying on the provisions of S.33 of the Judicature Act.

The section empowers the “High Court to grant absolutely or on

such term s and conditions as it thinks fit, all such rem edies as
25 any of the parties to a case of m ater is entitled to in respect of
any legal or equitable claim properly brought before it, so that

13
 as far as possible, all m atters in controversy betw een the
parties m ay be com pletely and finally determ ined and all
m ultiplicities of legal proceedings concerning any of those
m atter avoided”.

5 Bearing in mind all circumstances surrounding this case, the court grants
to the Plaintiff general damages of Shs. 10,000,000/-, together with
interest.

It is trite law that “interest on general dam ages is com pensatory

in nature against the person in breach of eth contract”.

10 The Plaintiff is accordingly awarded interest on general damages at the

rate of 12% per annum from the date of judgment till payment in full.

Similarly, costs of the suit are also awarded to the Plaintiff based on the
principle of decided cases that “costs follow the event unless for
good cause court orders otherw ise. I t is a m atter of discretion
15 of court that ought to be ex ercised judiciously”. - See also S.27
of the Civil Procedure Act.

For all those reasons:-

1) Judgment on admission is entered against the Defendants jointly and

severally under 0.13 r 6 C.P.R.

20 2) It is also hereby declared that the Defendants breached the terms of

the loan agreement.

3) The Defendants shall pay to the Plaintiff the sum of Shs.

272,225,225/- due and owing from them to the Plaintiff.

4) General damages of Shs. 10,000,000/- are also awarded to the

25 Plaintiff.
14
 5) Interest at the agreed rate of 27% per annum shall be paid to the
Plaintiff from the first day of November, 2013, till payment in full.

6) Interest at the rate of 12% per annum to be paid on general

damages from the date of judgment till payment in full.

5 7) Costs of the suit are also awarded to the Plaintiff.

FLAVIA SENOGA ANGLIN

JUDGE
27.06.18
10

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