This follows the decision by the Court of Appeal to allow an appeal lodged by the Bank, which had challenged findings of the High Court’s Commercial Division given by Judge Frederick Werema on August 11, 2009.
Judge Werema had ruled in favour of the businessman and Dascar Limited, concluding that the Bank was not entitled to recover the advanced loan, interests and costs and directed Mr Abrahamsson, who had guaranteed the facility to be paid 5m/- that had been deposited in court.However, in their judgment, the justices of the appeals court ruled, “the judgment and decree of the trial court cannot be left to stand. It is reversed and instead, the judgment is entered for the appellant bank.”
Justices Salum Massati, Katherine Oriyo and Augustine Mwarija said that it was sufficiently established, going by the parties’ pleadings, which are binding on them, and the evidence on record that the appellant bank was entitled to the recovery of the principal sum of 10m/- within six months.
Going by exhibits, they noted, there was an interest at 20 per cent per year, as well as a penalty of five per cent on any excess created without prior arrangements.
“With these clear terms, we find it unreasonable on the part of the trial court to find that the appellant was not entitled to the agreed or anticipated damages,” the justices ruled, when upholding grounds of appeal argued by advocate Dilip Kesaria, assisted by Paschal Kamara, for the Bank.
According to the justices, there was no dispute that there was a loan agreement between the Bank and Dascar Limited, which the businessman guaranteed and that there was default in its repayment for over five years in between which the appellant kept on following up.
They said that once a guaranteed debt is due and the principal debtor has failed to pay it, it was the duty of the surety to pay it together with all the attendant consequences arising from the breach and terms of law, once the principal debtor defaults in the payment of the loan, the surety steps into equal footing.
“We hold under the contract of guarantee and the overdraft facility, the liabilities of the respondents are coextensive and so both are equally liable for breach of the terms of the facility.
This means that they are liable not only for principal sum but also for all the accrued charges and interests,” they ruled. Before the High Court, the Bank had sued the respondents for the recovery of 40,063,788/- being 10m/- as the principal sum advanced to Dascar Limited as an overdraft facility, recoverable in six months and the balance was interest and other accrued charges.
Mr Johan Harald Christer Abrahamsson had been sued as a guarantor of the company. It so happened that as at June 20, 2008, the Company had failed to repay the loan, which had by then accrued to 40,063,788/-. On July 22, 2008, the Bank instituted the suit against the respondents.
/Daily News.
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