BEFORE: JUSTICE GEOFFREY KIRYABWIRE
RULING
This is an application by way of Notice of Motion brought under sections 34, 93 and
98 of The Civil Procedure Act Cap 71 and .0 48 r 1 of The Civil Procedure Rules SI
65-3 for orders that

“(a) A declaration do issue that the Respondent has became liable as surety for the performance of the decree in Civil Suit No. 1197 of 1999.
(b) The decree in Civil Suit No. 1197 of 1999 be executed against the Respondent.
(c) The costs of this application be paid by the Respondent to the Applicant.”

The general grounds for the Application under the Notice of Motion are:

1.       The Respondent by guarantee dated 24h July 2003 became surety for the due performance of the Decree in HCCS No. 1197 of 1999 upon the Applicant presenting a Court of Appeal Order or Decree indicating that the appeal filed by the commercial Bank Ltd against the decree in HCCS No. 1197 of 1999 has been decided and determined in favour of the Applicant herein.

2.       The applicant has presented to the Respondent an order of the Court of Appeal indicating that the appeal filed by Uganda Commercial Bank Limited Against the decree in HCCS No. 1197 of 1999 by the Respondent claiming to have merged with the Uganda Commercial Bank Limited has been decided and determined in favour of the Applicant but the Respondent has denied its liability to satisfy the decree.

The application is supported by an Affidavit of one Andrew Wamina Advocate practicing with counsel for the Applicant. There is an Affidavit in reply by one William Kasozi Head legal/Company Secretary of Stanbic Bank Uganda Limited.

Mr. Kasozi in Para 13 of his Affidavit generally states that the requirements of the guarantee have not been met; which to my mind means that Respondent indeed denies liability.

Both Affidavits have extensive annextures, which cover the pleadings, orders, rulings and Judgments that arose in the High Court and the Court of Appeal.

For purposes of this Application the brief facts can be said to be the following.
According to Annex “A” to the Affidavit of Andrew Wamina, which is a Decree of the High Court in HCCS No. 1197 of 1999 Atabya Agencies Limited Vs Stanbic Bank Uganda and Attorney General on the 20^th March 2003 the Hon. Mr. Justice
Richard Okumu Wengi gave Judgment for the plaintiff against the first defendant in
the following terms:

1.       “The Suit against the second Defendant (that was The Attorney General) stands struck out with no orders as to costs.

2.       The Judgment is entered for the plaintiff against the first Defendant (that is Uganda Commercial Bank Limited) who is ordered to pay the Plaintiff.

(a)      Shs. 66,050,000/= with interest at 30% p.a. from the date the expenditure was incurred till settlement in full.

(b)      General damages for breach of the banking contract by way of interest at 30% calculated on Shs. 294,815,269/= from 4/7/1996 till settlement in full.

(c)      Shs. 30,000,000/= as damages for injury to the Plaintiff’s business reputation and credit with interest thereon at 30% p.a. from the date of filing till payment in full.

(d)      Costs of the suit”

All 3 parties (the Plaintiff and 2 defendants) to the suit through their counsel signed the Decree. The first Defendant Uganda Commercial Bank Limited then on the 20^th March 2003 lodged a Notice of Appeal against the decision of Hon Justice Okumu Wengi. A Notice of Motion was also filed under Civil Application 290 of 2003 for the execution of the decree in High Court Civil Suit No. 1197 of 1999 to be stayed. These stay of execution proceedings resulted in a Bank Guarantee in the amounts of “Ug. Shs. 904,025,816/= plus further interest” being issued in favour of M/s Atabya Agencies Limited by M/S Stanbic Bank of Uganda Limited on behalf of Uganda Commercial Bank. The purpose of the said Guarantee was (see Para 1 of the guarantee)

“... In consideration of Messrs Atabya Agencies Limited as Judgment Creditor entitled to immediate payment of its decretal sum/ interest and taxed. Costs consenting to the to the High Court making an order staying execution of the decree in HCCS No. 1197/1999...”

The stay of execution having been secured by the said guarantee, a memorandum of Appeal in Court of Appeal of Uganda in Civil Appeal No. 69 of 2003 was filed and headed
“STANBIC BANK UGANDA LIMITED
(Now merged with Uganda Commercial Bank Limited::::::::::::::::APPELLANT

There was clearly a modification of parties at appeal. Stanbic Bank Uganda Limited who was the guarantor of the whole appellate process now also appeared as The Appellant by reason of being merged with Uganda Commercial Bank Limited. In other words it took over the Appeal from Uganda Commercial Bank Limited.

Atabya Agencies Limited through their counsel contested this apparent “take over”
of the proceedings by M/S Stanbic Bank and filed in the Court of Appeal at
Kampala Civil Application 110 of 2003 [arising out of the Civil Appeal No. 69 of
2003] by way of Notice of Motion with the following grounds.

1.       “That the Appeal was instituted in the names of a wrong party who was not party to the proceedings in the lower court.

2.       That M/S Stanbic Bank Uganda Limited., has never been merged with Uganda Commercial Bank Limited.

3.       That in the premises there is no appeal from the Decree of the High Court in HCCS 1197 of 1999”.

The court of Appeal with a Coram of Hon. Mr. Justice G. M. Okello (JA), Hon. Mr. Justice A. Twinomujuni (JA), Hon. Lady Justice C.N.B Kitumba (JA), heard the application. Their lordships on appeal found merit in the application and allowed it with costs to the respondent.

Their lordships unanimously agreed and ruled that

“In the instant case, the Notice of Appeal is deemed to have been withdrawn after the expiry of sixty days prescribed by rule 82(1) of the Rules of this
court. No appeal exists.”

Their Lordships also declined a request by learned counsel for the appellants to exercise their inherent powers to strike out from the memorandum of Appeal the name Stanbic Bank Uganda Limited and restore that of Uganda Commercial Bank Limited. It is important to state at this point during the appeal it was conceded that Uganda Commercial Bank and Stanbic Bank Uganda Limited had not yet legally merged. What followed then was yet another Civil Application No. 9 of 2004 in The Court of Appeal for orders that;

“a) The applicant be given leave to appeal out of time (this time to the Supreme Court).
b) Execution of the High Court Decree be stayed pending the filing and determination of the Appear.”

The grounds of the application together with the Affidavit of Dr. J.B. Byamugisha counsel for the Applicant seemed inter alia to refer to two main points. First that Dr. Byamugisha had by error instituted the appeal in the names of Stanbic Bank Ltd and not UCB Limited and secondly that in the interests of Justice this mistake should be remedied by extending the time with which the applicant should appeal.

What followed was yet another Civil application No. 12 of 2004 in The Court of Appeal
 

This application was for an interim order staying execution in High Court Civil Suit
No. 1197 of 1999 pending the hearing of court of Appeal Civil Application No.9 of
2004.

The Application was heard the Hon. Justice Amos Twinomujuni JA (sitting as single Judge). He observed in his ruling the sums of money involved in this dispute were “colossal;” about one billion shillings, which if the decree were executed would be difficult to recover. However on the other hand he also observed that there was a high probability that the application was intended to protect Stanbic Bank from fulfilling its obligations it voluntarily assumed. Justice Twinomujuni then granted the application but conditionally.

The condition was that the Applicant deposits in court by bank draft the sum of Ug.
Shs. 1,001,742,124/= in favour of the Respondent. A full bench in Civil Application
No.9 of 2004 would handle the disposal of the Bank draft at the determination of
that application.

From the pleadings and supporting Affidavits it appears this Bank draft was never deposited in court and in any event, The Uganda Gazette of the 30^th January 2004 Published General Notice No. 18 of 2004 striking .off Uganda Commercial Bank Limited off the register of companies. These to me are the salient facts leading to the application before me (I have not reviewed the specific arguments in court).

At the hearing Mr. Walubiri appeared for the Applicant and Dr. Byamugisha appeared for the Respondent.

Mr. Walubiri contended when C.A 69 of 2003 filed by Respondent claiming to be
merged with UCB Limited was dismissed the Respondent as surety became liable. He argued against the contention by the Respondents that the dismissed appeal was not an appeal within the terms and understanding of the guarantee.

Mr. Walubiri argued that in order to determine whether the appeal that was dismissed was the appeal envisage in the guarantee was a question of interpretation. He argued that the test to be applied in this interpretation was

‘To interpret the document and give it a meaning which it would convey to a reasonable person having all the background knowledge which would have been available to the parties at the time of making the document”

“In this regard he referred me to Halsburys Laws of England 4h at Para
163(1).”

Applying that test Mr. Walubiri broadly argued that the appeal that was dismissed was the appeal that had been envisaged by the guarantee and that in any event was made to facilitate a stay of execution pending an appeal from the High Court Judgment/Decree.

Mr. Walubiri further argued that in order to get a true interpretation of the guarantee one had also to apply a canon of interpretation which is to look at the entire guarantee to get its meaning. He further argued that this was necessary to give effect to the intention of the parties.

Mr. Walubiri further argued that where for example doubt arises upon the construction of a grant then this doubt should be held in favour of grantee as against the grantor. In this regard he referred me to Para 177 of Halsburys laws of England. Mr. Walubiri argued that Uganda Commercial Bank Limited could not take advantage of their own wrong by filing an incompetent appeal and then saying that it was indeed incompetent. He again referred me to Para 179 of the same Halsburys laws of England.

Lastly Mr. Walubiri argued that C.A. No. 69 of 2003 was in favour of his client and that is also what Justice A. Twinomujuni (JA) held in CA. No. 12 of 2004.

For the Respondent on the other hand Dr. Byamugisha argues based on the ruling in C.A 110 of 2003 at p.16 that No appeal existed and therefore the applicant should have proceeded to execute against Uganda Commercial Bank Limited which the Applicants knew was still doing business at the time.

He further argued Uganda Commercial Bank Limited did not commit any wrong because it did not appeal.

Dr. Byamugisha argued that all the Applicants had to do was to comply with Para 1 of the guarantee. That is the Applicants had to show that an Appeal filed by Uganda Commercial Bank Limited had been determined against them and that the court of Appeal order or decree had been produced to the Respondent. However he argues that there was no such order.

Dr. Byamugisha argued that for there to have been an appeal properly lodged, a memorandum of Appeal and court fees should have been paid by Uganda Commercial Bank Limited, which was not the case. He argued that for the Respondent to pay the conditions necessary to establish liability must have occurred and in this regard he referred me to

(i) Burton V Gray law Reports v 8 P. 932.
(ii) Eshelby V Federated European Bank [1932] 1 KB 423.

He outlined the conditions in this case as follows:

1.       Uganda Commercial Bank Limited must have filed an appeal. [This he argues was not done].

2.       That the said appeal must have been heard and determined by the court of Appeal [This he argues also was not done].

3.       That an order or Decree of the court of Appeal certifying that the appeal has been determined in favour of Atabya must be brought to Stanbic [This he also argues could not be done because they do not exist].

In other words the conditions for Stanbic Bank to pay do not exist.

Dr. Byamugisha also argued that the guarantee should not be given Commercial context because the Applicant deserved no Justice having “knocked out” the appeal on technical arguments.

He conceded that though a merger document between Uganda Commercial Bank Limited and Stanbic Bank (U) Limited was signed on the 13^th September2002 the necessary documents had not been filed with the company Registry. He argued that in filing the appeal as they did, they were being open and candid as Uganda Commercial Bank Limited was under liquidation. However since the Applicants were only interested in striking out the appeal they should have moved against Uganda Commercial Bank Limited or its liquidator.

The arguments presented to court by both counsel to the parties here to are very compelling and have been of good guidance to the court.

This Application brought under sections 93 and 34 of the Civil Procedure Act Cap
71.

Section 93 is Central to this application and it reads

“93 Enforcement of liability of surety where any person has become liable as surety:

(a)      for the performance of any decree or any part of it,

(b)      for the restitution of any property, or

(c)      for the payment of any money or the fulfillment of any condition imposed on any person, under an order of courting any suit or in any proceedings consequent thereon, the decree or order may be executed against him or her to the extent to which her or she has rendered himself or herself personally liable, in the manner herein provided for the execution decrees, and that person shall for the purposes of appeal be deemed a party within the meaning of section 34 if such notice in writing as the court in each case minutes sufficient has been given to the surety.”

My understanding is that section 93 gives the right to a Judgment Creditor/Decree holder to execute a decree against a surety who has undertaken to see to the performance of the said decree.

This undertaking may be in the form of furnishing security or giving a guarantee to perform the decree or make payment of the decretal amount. Osborn’s Concise Law Dictionary 6th defines a surety thus;

“A person who binds himself usually by deed, to satisfy the obligation of another person if the latter fails to do so; a guarantor...” (Emphasis mine).

From the above definition the performance, of the surety and his principal (The Judgment debtor) is both joint and several. If the Judgment debtor satisfies the decree fully then the surety is discharged.

Section 34 of the Civil Procedure Act and in particular S. 34 (1) provides
“34 Questions to be determined by the court executing the decree

(i)      All questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge, or satisfaction of the decree, shall be determined by the court executing the decree and not by a separate suit..”

This section to my understanding guards against the proliferation of new suits when proceedings have reached execution stage. It is important to point out that the court executing the decree is not a court sitting on appeal. Since this matter is at execution stage the court will not go behind the decree unless it was given with inherent lack of jurisdiction or is a nullity by reason of fraud or operation of law. Questions therefore should relate to the execution, discharge or satisfaction of the
decree.

Based on the above the question that is to be determined is properly put in the Notice of Motion namely

“a) [A declaration do issue] that the Respondent has become liable as a surety for the performance of the decree in Civil Suit No. 1197 of 1999...”

For the Respondent as earlier observed it has been strongly argued that they have not become liable, as there was no appeal hence order or decree of the Court of Appeal to present. Both parties in principal agree that liability is to be determined from the Bank guarantee dated 24^th July 2003 drawn by M/S Stanbic Bank of Uganda Limited in favour of M/S Atabya agencies Limited in the amount of Ug. Shs. 904,025,816/= plus further interest. This was clearly a very large guarantee. The guarantee appears to be tightly worded but the key paragraphs are the following:

“1. In consideration of M/S Atabya Agencies Limited as Judgment creditor entitled to immediate payment of its decretaI sum, interest and taxed costs consenting to the High Court making an order staying execution of the decree in HCCS No. 11971/999 Atabya Agencies Limited Vs Uganda Commercial Bank Limited a limited liability company incorporated and carrying banking business in Uganda with our registered office at Plot No. 45 Kampala Road, P.O.Box 7131, Kampala do hereby undertake and guarantee to you that we shall on presentation of a Court Order or Decree duly sealed and signed as by law required and indicating that the Appeal has been decided and determined in favour of MIS Atabya agencies Ltd without further assurance or demand within ten (10) days pay MIS Kwesigabo Bamwine and Walubiri Advocates on behalf of M/S Atabya Agencies Limited the sum of Ug. Shs. 904,025,816/= or such lesser or higher sum as shall have been allowed or determined by the Court of Appeal plus further accrued interest at the rate set out in the High Court decree or such rate as shall have determined by the court of Appeal.

4. This guarantee shall not be considered as satisfied or discharged by any intermediate payment or satisfaction of any part of any sum or sums of money owing as aforesaid but shall constitute and be a continuing guarantee and extend to cover any sum or sums which shall for the time beThg constitute the balance due from Uganda Commercial Bank Limited to you on any such account or for any such matter or thing as herein before mentioned..

5. Notwithstanding the bankruptcy or liquidation of Uganda Commercial Bank Limited or merger with any other Bank or financial institution this guarantee shall apply to all sums due to you from UCB Limited.

6. Save as provided here in this guarantee shall be unconditional and absolute and the guarantor hereby waives all rights it may become entitled to as surety and/or of subrogation and set off until all sums due and or to become due under this guarantee are fully paid. -

7. The guarantor warrants and represents that it has full authority to enter into this guarantee.”

There can be no doubt from the above that M/S Stanbic Bank put itself in the position of surety within the meaning of Section 93 of The Civil Procedure Act.

The point of dispute is whether the appeal from HCCS 1197 of 1999 was determined in favour of MIS Atabya agencies Limited and there is a formal Court of Appeal order or Decree to that effect that has been presented.

On the 20 March 2003 Uganda Commercial Bank limited filed a Notice of Appeal against the decision in HCCS 1197 of 1999. On the 10 July 2003 a Memorandum of Appeal was filed in the Court of Appeal Civil Appeal No 69 of 2003. The Appellant for this purpose varied slightly and was headed
 

The appeal was stated to be as follows immediately after the named parties

“(Appeal from the decision of The High Court at Kampala by Hon. Justice Okumu Wengi made on 14/03/2003 arising out of HCCS 1197 of 1999)”

A study of grounds of appeal makes it clear to any person that indeed the Memorandum of Appeal was in respect of HCCS 1197 of 1999. M/S J.B Byamugisha Advocates filed the Memorandum of Appeal just as they filed their Notice of Appeal. Both the Notice of Appeal and Memorandum of Appeal were served on M/S Kwesigabo, Bamwine and Walubiri Advocates for the Respondent. There no doubt in my mind that the appeal was against the decree in HCCS 1197 of 1999 and by these actions was indeed being pursued by Appellants.
I find that for all material purposes Civil Appeal No. 69 of 2003 was the appeal envisaged under Para of 1 of the Guarantee dated 24^th July 2003.

As it turned out before the Appeal was heard M/S Atabya Agencies Limited in Civil Application No. 110 of 2003 by Motion applied to strike out Civil Appeal 69 of 2003 stating that the Appellant as named was not a party to the proceedings. This is because Stanbic Bank Uganda Limited had not merged with the Uganda Commercial Bank Limited. As we have earlier noted this was eventually conceded by counsel for Stanbic Bank though an agreement had been signed.

The Application was allowed and it was held at P.6

“…In the instant case, the Notice of Appeal is deemed to have been withdrawn after the expiry of sixty days prescribed by rule 82(1) of the rules of this court...”

Other passages referred to me by both counsel are at P.5.

“. . . In the circumstances of this case we find that Uganda Commercial Bank Limited must be deemed in law to have abandoned its appeal…’

And at P.6

“... No appeal exists.’
It appears to me that by reason of the above Civil Appeal No. 69 of 2003 failed.

As Dr. J. Byamugisha submitted on the authority of Kampala City Council vs. National Pharmacy Limited (C.A 13 of 1979) 1979 HCB 216 (CA).

“An appeal is instituted, according to rule 81 of the court of Appeal Rules, by lodging in court a memorandum of and such other records mentioned in that rule and on payment of such fees and deposit as required by that rule.”

In the instant case all conditions for lodging an appeal were met but the appeal failed and thus brought to an end. Such a failure can only work against the Appellant in the original Notice of Appeal namely Uganda Commercial Bank Limited and in favour of Atabya Agencies Limited.

I find that such was the determination of the Court of Appeal in Civil Application No.
11 0 of 2003 (arising from Civil Appeal No. 69 of 2003). To determine or to have
determined means “To come to an end” (see Osborn’s Law Dictionary 6th Edition
P 117) that being the case this is why there is a notice of Appeal dated 22 January
2004 to the Supreme Court, which reads.

“TAKE NOTICE that STANBIC BANK UGANDA LIMITED and UGANDA
COMMERCIAL BANK LIMITED being dissatisfied with the decision of the Hon. Mr.
Justice Okello JA, Hon. Justice Twinomujuni JA, and Hon. Lady Justice C.N.B.
Kitumba JA made on the 16th January 2004 intend to appeal to the Supreme Court
of Uganda against the whole said decision” (Emphasis mine).

However the threat of execution was still present and so Uganda Commercial Bank
Limited under Civil Application No. 12 of 2004 applied before a single Judge of
Appeal for an interim order staying execution in HCCS No. 1197 of 1999.
As earlier observed in this Ruling The Hon. Justice A Twinomujuni (JA) while noting that the sums involved in the application were colossal and could lead to waste also observed

“On the other hand there is a high probability that this application is intended to protect Stanbic Bank from fulfilling its obligations it voluntarily assumed to pay the decretal amounts within 10 days from the date they are informed that the appeal in this court (I. e. court of Appeal-addition mine) was determined in favour of the Respondent.”

He thus orders Uganda Commercial Bank to deposit in court a Bank draft for Ug. Shs. 1,001 ,742,124/= in favour Atabya Agencies Ltd as a condition. To The learned Judge’s mind it is clear that the Appeal had been determined in favour of Atabya Agencies Limited hence the condition he put on the interim order. There is no evidence that the condition was indeed met so even the application for the interim order at the court of Appeal is deemed to have failed.

That being the case there is nothing barring me, from considering, the declarations sought.

From the pleadings and the annexed documents thereto on the 20^th January 2004 M/S Kwesigabo, Bamwine and Walubiri Advocates wrote a demand to The Company Secretary Stanbic Bank Uganda Limited demanding payment of Ug. Shs. 1,001,742,124/= and accrued interest as at 19/01/2004 within 10 days pursuant to the Bank guarantee. A copy of the order that Civil Appeal No. 69 of 2003 had been struck out with costs to the Respondents was attached. The said order dated 19th January 2004 was approved by the signature of both counsel for the Applicant and counsel for the Respondent.

Now all I need to do is to establish whether the conditions to trigger the guarantee were met. Dr. J. Byamugisha counsel for the Respondent enumerated the tests and from the submissions of Mr. Walubiri I discern that he generally was saying the same thing. The tests are

1.       Uganda Commercial Bank Limited must file an appeal.

2.       That the Appeal must be heard and determined by the Court of Appeal.

3.       That an order or Decree of the Court Appeal Certifying that the appeal has been determined in favour of Atabya Agencies has been presented.

Counsel for the Guarantor/Respondent submits that the answers to all the tests are in the negative. He further submitted the Applicant would be best advised to file his claim with the liquidator now Uganda Commercial Bank Limited is no longer carrying on business. Counsel for the Applicant or the other hand looking at the whole guarantee document and giving it the widest interpretation says that the tests have been met.

I have already said that the Guarantee is tightly worded and I think it should be read as whole. I find that as to its interpretation I would add another test of whether any reasonable bank having regard to the circumstances of guarantee would consider itself liable. I find that any reasonable bank in these circumstances would find itself liable. In any event Stanbic Bank Uganda Limited cannot be said to have been taken by surprise or prejudiced by this finding having been “defacto” behind the whole appellate process, and so fully understood what was taking place.

It is true that the Applicant can go after the liquidator but again it would be so much more realistic to evoke the guarantee as was done in this case.

Indeed the only mitigating situation for Stanbic Bank Uganda Limited can be discerned from the proviso of Para 6 to the guarantee, which reads

“Save as provided herein this guarantee shall be unconditional and absolute and the Guarantee waives all rights it may become entitled to as surely and/or of subrogation and set off until all sums due and or to become due under this guarantee are fully paid.”

In other words Stanbic Bank Uganda Limited should have taken a counter guarantee from Uganda Commercial Bank Limited in order to mitigate any payment it has to make under this guarantee.

I thus declare and order as follows:

1.       That the Respondent Stanbic Bank Uganda has become liable as surety for the performance of the decree in High Court Civil Suit No. 1197 of 1999.

2.       That the decree in High Court Civil Suit No. 1197 of 1999 be executed in the amounts outlined in the letter of demand dated 20^th January 2004 to Stanbic Bank Uganda Limited.

3.       Costs f this Application are to be paid by the Respondent to the Applicant.

Geoffrey Kiryabwire
Ag. JUDGE

Date 17/05/04