.~~P-~ P'\ !~ht:/'kr32 THE REPVBLIC OF VGANDA iN THE SUPRE~IE COURT OF"UGAND.-\:' ' / AT ~IENGO (CORA]/; ODQKI, C .J, ODER, TSEKOOKO, KAROKORA, KA~VYEIHAJ/BA, JJSC) CIVIL APPEAL NO. 1i2001 BETWEEN BANK OF UGM'DA ::::::::::::::::::::::::::::::::::::::APPELLANT AND BANCO ARABE ESPANOL ::::::::::::::::::::::::::::RESPONDENT (Appeal ./;.om lhe decision (?l lhe COliri (?l Appeal (KalO. Engwall. Killlmha. .J.JA) at Kampala. dated the 2(1" day q( Octoher. 2000. in Ch'il Appeal So. 13 (?t"2000) '. > JlTDG~IENT OF K.-\NYEIHA~IB.-\~ J.S.C This is a second. appeal against the judgment of the Court of Appeal dismissing an appeal with costs from the judgment of the High ., Court dated 22/2/2000 entered against the appellant in favour of the respondent. The facts giving rise to this appeal may be summarised as follows: On II/I 1/I 987, the Uganda Government signed a loan agreement with the respondent in Madrid, Spain. The loan was for USS1,000,000. The appellant's representative, one George Nteeba, signed the agreement on 'behalf of the appel1antas a guarantor. It was provided in the agreement, that the loan would be repaid in 7 instalments on the following named dates, 11/ I0/90, 11/4/91, II!I 0/91, 13/04/92, 13'10/92, 13/04/93 and 13/10/93. The respondent was to release and remit the loan monev to the Uganda Government within 180 days from the date of signing the loan agreement. However, the period was later extended. On 21/05/91, the first instalment was paid together with accrued interest which by then had accumulated to US 552,767.36. Following the . first instalment, no furth~r instalments were subsequently paid despite the respondent's several demands for such payment. Ultimately, the respondent made a final demand for the repayment of the loan by the appellant in its capacity as guarantor. As time passed, it became increasingly clear that the appellant was either unwilling or unable to repay or acknowledge liability under the loan agreement. The respondent decided to sue the appellant under clause 18 of the agreement and, for this purpose, filed a plaint in the High Court against both "theappellant and the Government of Uganda. In its defence, the appel1antdenied liability. At the trial in the High Court. a preliminary objection was raised on behalf of the Government of Uganda .) ... .v{hat the suit was statute. barred si&e II th A~, dismissed the suit 00 the ~9mHj t,ftat it-II'"I I.~~ p",mlin.g 1'99F. The learned trial judge upheld the objection and aga.inst the Government of Uganda. This left the appellant raised a number of appellant as the sole defendant. The defences. One of those defences was that the appellant" s sole liability was limited to merely causing the borrower, that is the Government of Uganda, to pay the debt. Another defence was that the loan agreement had been frustrated by the borrower's policy of liberalising the coffee trade and of deciding to deal in foreign currency. The trial judge rejected the appellant" s defence~ and entered judgment for the respondent and made specific orders of the court to which I will advert later in this judgment. The appellant appealed to the Court of Appeal which dismissed the appeal and ordered that the appellant pays the loan and interest thereon which by now had accumulated to the sum of U5S 1,762,347.51, plus interest at a rate of 18% per annum from the date of the judgment of the Court of Appeal to the date of payment. also awarded 5hs.20,000,000 . The Court to the respondent general damages in the sum of with interest thereon. The judgment of the Court of It is against that judgment and Appeal was delivered on 20. 10.2000. orders that this appeal has been brought to this Court. Peculiarly, both in this Court and in the Court of Appeal. the respondent's counsel chose to file written submissions of defence under Rule 93 (I) and (2) of the Rules of this Court even though the appellant's counsel had chosen not to and did not do so. Indeed, in the Court of Appeal and in this Court, counsel for the appellant addressed the courts orally. In my \'iew, counsel who file plaints or appeals and defences in courts should endeavour.to mutually agree as to what nlles of the court they wish to follow as this would save parties costs and the courts time. -t Be that as it may, there seems to be no obligation upon any counsel to v'pr~~eed one w~y. or the other ev~n if , ,wIl1mg or unwIllIng to proceed m the manner chosen by ~~J~' ~ opposing c~\t~ ~/ counsel. The appellant's Memorandum of Appeal contains 10 grounds of appeal framed in such a way that grounds -t - 10 inclusive are indicated as being alternative to the first three grounds. At the hearing of the appeal counsel for the appel1ant abandoned grounds 8, 9 and 10. The remainder of the grounds are fTamed as fol1ows: 1- The learned Judges of the Court of Appeal erred in law in holding then the validity and enforceability of the loan agreement against the appel1ant as guarantor was governed by the Corporate Bodies Contract Act 1960 of the United Kingdom and not by the Bank of Uganda Bye-Laws of 1968. ... . ...- 'L The learned Judges of the Court of Appeal erred in law in holding that the loan agreement was enforceable allainst the ... appel1ant as guarantor although the appel1ant' s seal. it was not executed under ., .)- The learned Judges of the Court of Appeal erred in law and in fact in bolding that the telex' of the appellant's Ag. Director of External Debt Management dated 15th February, 1991, estopped the appel1ant from contesting the validity and enforceabilitv of the Iluarantee as allainst it. ... IN THE ALTERNATIVE TO GROUNDS 1.2 3 ABOVE 4- The learned judges of the Court of Appeal erred in law and in fact in holding that the appellant's liability was not 5 discharged by the variation of the draw down date for the loan by the respondent and the Go\'ernment of Uganda without the consent of the appellant as guarantor and outside the scope of clause 4 of the loan agreement. 5- The learned Judges of the Court of Appeal erred in law and in fact in applying the wrong test in law in deciding whether the alteration of the draw down date for the loan bv the respondent and the Government of Uganda without the consent of the appellant did not amount to alterations of the tenns of the loan agreement. 6- The learned Judges of the Court of Appeal erred in law and in fact in holding that the alterations and extensions of the repayment dates for the loan instalments granted to the respondent to the Government of Uganda without the consent of the appellant did not amount to alterations of the tenns of the loan agreement. 7- The learned Trial Judges (sic) of the Court of Appeal erred in law and in fact in holding that even if the alterations and extensions of the repayment dates of the loan instalments without the consent of the appellant were alterations of the tenns of the loan agreement, this did not discharge the appellant's obligations as guarantor.. Mr, Masembe - Kanyerezi, counsel for the appellant, urged grounds I & 2 together, ground 3 on its own, grounds 4 and 5 together and grounds 6 and 7 together. Counsel substantially adopted the submissions he had made in the Court of Appeal in arguing grounds I and 2. He submitted that the law applicable in this case should have been the Bank of Uganda Bye-Laws which stipulate the manner in which a 6 contract intended to bind the Bank must be made. The making of such a contract, in this case the loan agreement, n:~.f~h Rule 2 of Statutory Instrument No. 157 of 1968,. He submitted-""thatthe Court of Appeal had erroneously confirmed the finding of the learned trial judge that the absen<;eof the ~ank' s seal did not affec~ the validity of the loan agreement because the appellant's agent, Mr. Nteeba, had signed the loan agreement on behalf of ~heappellant. Mr. Masembe-Kanyerezi, contended that for the loan a1ITeementto be validly effected. it had to ~ ~. comply with the Bank of Uganda' s bye - laws requiring the fixing of a seal. Counsel criticised the opinion of the learned Attorney- General of Uganda which supported the loan agreement as \'alidly made and enforceable in courts of law. He contended that the Attorney-General, being the principal legal adviser to the Government of Uganda was not . the proper person to adv~sethe Bank and the respondent on the proper law applicable and that in any event, his opinion was per inClirilll11 since it ignored the Bye-laws of the Bank of Uganda. Counsel submitted that two sets of laws ought to have been recognized and applied by the courts below. The first related to the capacity of parties to enter into a contract with the Bank of Uganda. That capacity was strictly governed by Uganda laws which in this case, were the Bye-laws of the Bank of Uganda which provide that such a contract must be made under the seal of the Bank and be witnessed bv . ~ specified Bank officials. Failure to apply these bye laws and . procedures invalidates any alleged agreement or contract. Counsel contended that it is only when the a1ITeements validly made in i ~ ~ accordance with the bye laws and procedures of the Bank that it may be enforced under any other law, in this case, English law and in particular under the Corporate Bodies Contract Act, 196O, of the United Kingdom. 7 rv-vJ Counsel cited Chitty on Contract~ Edition, Yolume 1, .-\.R. . ~£. 'V right and Sons Ltd \'. Romford Borough Council, (1957) I~" -n I and Hunt \'. 'Yimbledon Local Board (1878) CPD vol. III 208" in support of his submissions. Mr. Semuyaba, I~arned counsel for the r~spondent, in \\Titten submissions" supported the findings and decisions of the courts below. He contended that the absence of a seal did not affect the validity of the loan agreement. He observed that in any case the loan agreement had been signed by Mr. George Nteeba who had a valid power of Attorney that had been duly sealed and signed by the Bank's officials who are the right witnesses to both the signature and the sealing of the Bank"s document. It was counsel" s contention that the purpose of granting to an official a power of attorney stamped with the Bank's seal is to enable that . official to transact business on behalf of the Bank. Counsel" further contended that the effect of a power of attorney is that the donee of it has the full powers of the donor to do all that he or she is authorised to do. Indeed" according to learned counsel for the respondent" the power of attorney authorised Mr. Nteeba to sign the loan agreement and to do all other things incidental thereto and the donor" s Goyernor and Secretary undertook to confirm and ratify all the donee's actions. Mr. Semuyaba supported the opinion of the Attorney General and . indeedwonderedhow it couldbe challenged by .counselfor the appellant" considering that both the Attorney-General and the Bank of Uganda were the Principal advisers to the Government of Uganda" one on legal matters and the other, on financial transactions. Lastly, Mr. Semuyaba, submitted that under clause 16 of the loan agreement, Exhibit PI, the parties to the agreement chose English Law to govern the loan 8 agreement. Counsel cited Chatney Telegraph v The Brazilian Submarine (supra), the Co. Ltd. , (1890) lOB 97, Chitt)° on Contracts, r.K. Corporate ~on-performing Bodies Contracts Act, 1960, General Parts (r) Ltd Y. Assets Recovery Trust, C.A. No.5 of 1999, (S.C.), (unreported), Powis and Byran Ltd v. Bonquet DV People (1967) 1ALR Comm 313 which counsel distinguished from the present case and contended that it is . governed by English Law as stipulated in the . loan agreement. He cited numerous other authorities which in my opinion were unnecessary in advancing the cause of the defence against this appeal. In my view, the issues framed in grounds 1 and 2 of the Memorandum of Appeal constitute the main substance of this appeal. I will therefore first resolve those issues. The facts and history of this case which has dra2:2:ed in'U2:andancourts for more than a decade are on ... simple and clear and are pot in dispute. The onl~'matters which have occupied everyone's attention for so long are whether or not the loan agreement concluded bet~ween Government of Uganda, the respondent the Bank, and the appellant had been validly made and whether it was 2:overned bv U2:andan law or En2:lish law. ... ... The loan agreement which was made in Madrid, Spain, on 11th November, 1987, and was signed by representati\.es of all the parties to it.. contains the followin2: relevant clauses: ... AThe BORRQWER has requested ~esbank to grant to it a loan of up to a maximum of USS One million ( 1,000.000) to finance 15°/0(Fifteen per cent) of the price under the contract signed on 12thof May, 1987 between the 9 BORROWER and INIRAIL (the Exporter) for the supply of one hundred tank wagons. B- The GUARANTOR (The Bank of Uganda) is willing to guarantee in favour of Aresbank, the BORROWER's obligations, in consideration of ARESBANK's commitment for the granting of such loan, C- The Bank (Aresbank) has agreed to provide the loan requested on the terms and conditions hereafter set forth. . Now therefore this agreement witnessed as follO\\'s :- ----------------------------------------------------------------------------------- 3- CONDITION PRECEDENT: This agreement will enter into full force and effect as of the date on which ARESBANK receives a legal opinion, satisfactory to the Bank, about the legality, validity and enforceability of this agreement. --------------------------------------------------------------------------------------10 REPRESENTATION AND WARRANTIES: The BORROWER hereby represents and warrants to the LENDER. that, (a) The BORROWER has the power to enter into and perform its obliQ:ations and to borrow under this aQ:feement. and has . taken all necessary actions to authorise the execution of this Agreement and the borrowing under this Agreement, and furthermore,the BORROWER is actingsubjectto private law, not vested with any 'dejure imperii' (b) This agreement constitutes and will constitute valid and binding obligations of the BORROWER. (c) The BORROWER has obtained and received all the . . necessary approvals and authorisations for this facility, and specially represents and warrants that: 10 i) The BORROWER is authorized to operate in foreign currency transactions. ii) This facility has obtained the prior pennission of the BANK OF UGANDA ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... .....- II. SPECIAL COVENANT: The BORRO\\'ER hereby covenants and undertakes with the BANK that, from the date of this Agreement to the date upon which all monies owing by the BORROWER to the Bank under this Agreement are paid in full, it will not create or pennit to subsist any encumbrance over any of the revenue or assets present or future without the \\Tinen consent of the BANK. ........ 16. APPLICABLE LAW AND JURISDICTION (a) This Agreement shall be governed by and construed in accordance with English Law, and the parties hereto irrevocably submit to the non-exclusive jurisdiction ,................................................................ of English courts ------ 18- GUARANTEE: (a) We, the BANK OF UGANDA (The Guarantor) , a banking institution, established under the laws of Uganda, and being the Central Bank of the BORROWER, hereby unconditionally and irrevocably jointly and severally guarantee the due and punctual payment of any and all amounts payable by the BORROWER under the loan agreement in accordance with the provisions set forth herein. In the case of any failure by the BORROWER to punctually pay any interest on, or principal of, or any other amount II due under the Loan Agreement, we hereby agree on first demand made by tested telex to cause such payment. to be made to you in . compliance with the obligations of the BORROWER. Payment by the Guarantor shall be made to ARESBANK in place and, in the manner specified in ARESBANK' s Demand, without raising any exception or objection of whatever nature.(The State of Israel and the Republic of South Africa being excluded). ............................................................................ (11) The BANK OF UGANDA guarantees, ARESBANK that the foregoing undertaking and instructions will not be in any way !TI°dified or varied by any person or body or public authority of any kind, and that they win remain in full force and effect with all the payment obligations of the borrower hereunder are completely extinguished. The loan agreement was duly signed by one Hon. Robert E. Ekinu, Deputy Minister of Transport, under a power of attorney granted by the Minister for Finance for and on behalf of the Government of the Republic of Uganda the presence of one O.M.J. Nda\\llla~nior . Principal State Attorney .of the office of the Attorney General of Uganda. It was also si$ffiedby Mr. Geor!:!eNteeba.. Chief Accountant of the Bank ~ ~ of Uganda, under a power of attorney granted by the Governor of the Bank of Uganda on behalf of the Bank of Uganda and witnessed by the above O.M.J. Nda\\1l1a. lastly. . the loan A!:!feement was si$ffiedby Mr. Salem Zenatv. . - . General Manager, for and on behalf of BANCO ARABE ESPANOl, S.A. and witnessed by Mr. Domingo lago, Attorney - at -law, of Banco . Arabe Espanol, S.A. It }\"ouldappear from the foregoing provisions and 12 tenns that nothing could be more legally binding than this loan agreement. Nevertheless, the borrower and the Guarantor proceeded to present a number of obstacles and objections which, after protracted correspondence and court proceedings, have found their way to this court by way of second appeal. It is the contention of the appellant that both the learned trial judge and the Court of Appeal were wrong to hold and confirm, respectively, that the loan aereement is binding and enforceable when it was not made in ... ... accordance with the requirements of the law. The contention is to the effect that whereas it is true that the tenns of the agreement are governed, by and enforced under English law, the capacity of the Bank to enter into the loan aereement is ... governed bv the laws of Uganda and ... ... especially the bye-laws of the Bank of Uganda. "" The loan agreement was made and signed on behalf of the parties by their representatives in Madrid, Spain. The issue that arises is whether they or any of them had capacity to contract on behalf of their principles. There is no dispute that both the agents of the Government of Uganda and of the respondent had full capacity to contract and bind the parties they represented. The only dispute relates to the capacity of the representative who represented the guarantor, namely, the Bank of . Uganda, The agreement was signed by George Nteeba who possessed valid powers of attorney granted in accordance with the Bye Laws of the Bank of Uganda. 1968, Statutory Instrument!' 57/1968. In my opinion, the effect of a power of attorney which is duly signed and sealed in accordance with the regulations of a corporation and granted to that corporation"s authorised agent to travel abroad on a contractual mission is to enable that agent, without further ado, to contract and enter into a binding and enforceable agreement with a named party. 13 On whether or not the loan agreement was valid and enforceable. the parties to this tripartite agreement had been particular to include a clause in it which sought legal opinion as a condition precedent. The . appe))ant is the principal-fInancialadviser to the Go\'ernment of Uganda and the Attorney General is the principal legal adviser to the same Government. In consequence, nothing could be more authoritative and aunthetic than the opinion of the Attorney-General of Uganda which he expressed and wrote on the loan agreement. Mr. Joseph Mulenga, learned Attorney General, as he then was wrote his legal opinion in which he stated, inter alia, "5, Under the Balik (~fUganda Act (Act 5) (?f1966, the Balik (l Uganda is a b()(~\'cO/poraTe capable {?(entering into an agreement and has a common seal which may be du~\' auntheticated by the Go\'e17lOrand Secretary to the Bank 6. In accordance with the laws f?(Uganda, an Agreement signed hy a donor, (?(a power (?(alfO171eys as \'alid and effecti\'e as ~(it were i signed by the donor (?( such a po'wer (?(attO171ey. Inm}' considered opinion, the Agreement was concluded and executed/or and on beha(({?lthe Gm'e/71111ent the Bank o( and f Tganda by their respecti\'e alfO/71eysin accordance with the Laws (?lUganda, .8. Funhetmore, in my considered opinion, the agreement is ralid and constitutes legally binding and e/~lorceable obligations on the Gore17ll11ent nd the Bank f?l Uganda, in accordance with the a terms and conditions theref?(and there are no more legal requirements to befll(filled to make the Agreement more binding on the Gore17ll11ent and the Bank o( frr;anda. .. .L I-t This opinion was given on 22.12.1987 after the loan agreement had been signed. The opinion was in accordance with the contractual requirements of the parties as set forth in clause 3 of exhibit PI. Subsequently, the appel1antaccepted the validity and enforceability of the loan agreement Thus, as late as 15.02.1991, the Ag. EDMO Director of the appellan! sent a telex to the respondent, the message of which is not disputed, to the effect that: ..From.. Bank or [T~anda. .L This refer to loan agreemellT dated Sm'. 11.19R-jor HDT J.000, OOOjin' ' purchase qrpp Bank wagons, and To Telexes demanding paYl11ellT (?to principal and illTerest amouJ1ling to USD J./3,6./3. -3 due on 28th January, 9 J STP. HOe nO1di pute the claim. do The delay in paYl11eJ1lis being caused hy our precariOl!s Foreign Exchange po.~itioJ1.rJ"eare howe\'er, doing everything in our means to ensure that paymeJ1l is ejfected in due course STP. Regardfi T YK. rValusimhi .-lg. Director, EDA/O Bank of Uganda" It puzzles me that following these events, the appellant should turn ° round and question the applicability of the opinion of the learned Attorney General which confirmed loan agreement to be valid and enforceable throu!!h its director that it was bound by the same loan a!!feement and was . ~ ~ only being delayed fTompaying by foreign exchange constraints. I would therefore agree with the opinion of the learned Justice 15 Kato , l.A, who gave the lead judgment of the Court of Appeal when he said, --J/y ullderstalldillg oltllis clause (clallse 3), is tllat altllougll tile colltract was siglled 01111/11/87 it coliid IlOtbe operatiollallilltil tile opillioll oltlle Attorlley-Gelleral abollt tile legality oltlle agreemellt was received Tile clallse made tile Attorlley Gelleral's Opilliolla collditiOIlprecedellt Tile COil tract remailled ill abeyallce ulltil tile respolldellt received tile opillioll ill February, 1988, accordillg to tile evidellce 01 Ferllalldo Jlarqlles (P~V1)". . Following the opinion of the learned Attorney-General, the respondent proceeded to execute the loan agreement as evidenced by its correspondence in Exhibits PV, PVl and PVII. At the time the loan agreement was signed the Uganda Constituion designated the Attorney-General as the Principal legal Advisor of the Government of Uganda with functions, infer alia. to give legal advice and legal services to the Government on any subject and to . draw and peruse agreements, contract, treaties, conventions and documents by whatever name called, to which the Government is a party or in respect of which the Government has an interest. In my view, the opinion of the Attorney General as auntheticated bv his own hand and signature regarding the laws of Uganda and their ~ ... effect or binding nature on any agreement. contract or other legal ... ... transaction should be accorded the highest respect by government and public institutions and their agents, Unless there are other agreed . conditions,third parties.are entitledto believeand act on that opinion without further enquiries or verifications. It is also my \'iew that it is improper and untenable for the Government, the Bank of Uganda or any other public institution or body in which the Government of Uganda has 16 an interest, to question the correctness or validity of that opinion in so far as it affects the rights and interests of third parties. The contention by Mr. Masembe-Kanyerezi that the AttorneyGeneral's opinion is erroneous or that in any event, it does not bind the Bank of Uganda is not persuasive and I reject it. I agree with Mr. Semuyaba, counsel for the respondent, that the opinion of the Attorney General accepted by the respondent was a condition precedent to the validation of the loan agreement and once gi\'en" in writing as it was, it became the validing and authoritative opinion for the legality and enforceability of the loan agreement. While it is true that the Attorney- General plays a dual role as Government principal legal adviser on both political and legal matters. Nevertheless, in the latter role, the Attorney General is a law officer for the sole purpose of ad\'ancing the ends of justice. In this role, the Attorney General has access to all types of advice from fellow ministers who may have negotiated and authorised the singing of contracts, He has a host of qualified and experienced advisers " on legal matters of the kInd that were involved in"this loan agreement. Of the Attorney-General of England whose functions are legacies adopted in the Ugandan Constitution and laws, it was said in the House of Commons Debates, Vol.179, Cols 1213-121-1 of December,l8, 192-1, which is reported in John LJ, Edwards" The Attorney General, Politics and the Public Interest, 198-1,that, "It is the dllty of the Attorlley Gelleral, ill the discharge of his respollsibilides- elltrusted ill him, to illform himself of all relevallt circumstallces which might properly affect his decisioll. " Consequently, the"opinionof the Attorney'General on this matter should not be taken lightly, All things being equal, the opinion of the learned Attorney-General on this loan agreement was the best any of the 17 parties could have received and having received it, the appellant should not have a sound reason for seriously questioned its correctness or applicability in relation t? the loan agreement In the result grounds 1 and 2 of the appeal ought to fail. I now turn to grounds 3 of the appeal. Mr. Kanyerezi submitted that both the High Court and the Court of Appeal were in error to hold and confinn, respectively, that the telex message sent on behalf of the appellant to the respondent on 15thFebruary, 1991, Exhibit PIX, by the Ag. Director of EDMO of the appellant, Mr. Walusimbi, estopped the '. . appellant from denying its liability under the loan agreement. The telex message was to the effec~that the Bank of Uganda was not disputing the respondent's claim but wished to give reasons why it had delayed in keeping regular payments of the agreed instalments. Appellant's counsel" s sole ground for faulting learned trial judge and the Justices of Appeal was that where a contract, like the present, lacks validity and enforceability on which he submitted on grounds I and 2 of this appeal, then it matters not that subsequently the appellant admits . . liability. Counsel contended that the admission has no legal Counsel ~ited Chitt), on Contracts (supra), pages 191 consequences. and pages 191, paragraph -t5-t, where the learned author observes, "Tile powers of a corporatioll wlletller sole or aggregate created by statllte are collfilled to tllose givell e..'\:press(r by reasollable or illferellce by tile statllte collcerlled. If tile sllbject matter of a colltract made by sucll a corporatioll is outside tile scope of its collstitlltioll as defilled by tile statute, tile COilract is lllrra ,'ires t alld void. " 18 In response, Mr. Semuyaba, learned counsel for the respondent, contended that the doctrine of estoppel applied in this case, He cited the . case of J.S. ~Iayanja Nkangi v. National Housing Corporation, (1972) ULR, 37 in which the doctrine was applied. Kato lA. in his lead judgment in the Court of Appeal agreed with counsel for the respondent that the learned trial judge was correct to hold that the doctrine applied in this case. Since I have held that the loan alITeementwas validlv made ~ and is enforceable, I must also agree with the findings of the learned Justices of Appeal that it was correct to hold that the doctrine of estopped was properly applied in this case. Mr. Walusimbi's telex was clearly an admission by the appellant that it was indebted to the respondent. According to the Evidence Act, s. 113, when a party in its declaration, act, or omission, intentionally causes or penn its another person to believe a thing to be true and that other person acts upon such belief, neither that party nor its agent shall be allowed in any suit or proceeding to deny the truth of what was admitted. Ground 3 of the appeal ought to fail. In my opinion the failure of grounds, I 2 and 3 disposes of this appeal. However, the appellant through its counsel choose to list additional IITounds.name Iv -t.). . 6 and 7 . -' ~ ~ . as additional but alternative grounds of appeal. I-willbriefly comment on these grounds. On grounds 4 of the appeal, counsel for the appellant contended that liability on the loan agreement was discharged by the subsequent acts of the Government of Uganda and the respondent without consulting or obtaining the consent of the guarantor, the appellant. Mr. MasembeKanyerezi contended that the time within which to repay the loan agreement was extended by the respondent and borrower without the 19 consent of the guarantor and that this extension which amounted to a substantial alteration of the terms and conditions governing the loan agreement effectively discharged the appellant as guarantor from its obligations. .Counsel further contended that the trial judge and the Justices of the Court of Appeal were in error to hold that the extensions and renewals of time were not material nor substantial in the alterations of the terms and conditions of the loan agreement nor, did they constitute a detriment to the appellant. Counsel for the appellant cited Chitt)" on Contracts (supra), at p. .l46 and Holm \'. Brunkshill (1878) Q.B. 495, in support of his submissions. Mr. Semuyaba, learned counsel for the respondent, having traced the history and reasons for the extension and renewal of time allowed to the parties, submitted th~lt all along the Bank of Uganda was well aware and consented to the extension and renewals. Consequently, counsel contended that both the trial court and the Court of Appeal were correct in holding and confirming, respectively, that the extensions and renewals were neither material nor constituted such prejudice or detriment as to amount to a discharge of the appellant from its obligations as a guarantor. I find no reason to depart from the findings and decisions of the . . courts below. In my view, the appellant as principal financial adviser to the Government and guarantor of the loan knew or ought to have known the occurrences of the extensions and renewals and whether they affected its obligations in any material particulars. If so, it ought to have protested and given its intention to claim discharge from the loan agreement. It went along accepting all the alterations which incidentally were in favour of or suggested by the Government of Uganda for 20 which the appellant was principal financial adviser, without denouncing them. Now that it finds itself bound to repay the loan and interest therof, it cannot, at this eleventh hour of the proceedings claim successfully that the tenns and conditions of the loan agreement had been altered substantially by the other two parties to that agreement. . Ground 4 therefore ought to fail. With respect, I can see no substance in grounds 5, 6 and 7 as alternative grounds to grounds 1,2 and 3. On the contrary, they appear to be nothing more than minor variations on the other grounds which I have considered. AJIin all, this appeal ought to fail with costs to the respondent in this court and in the courts below. I would uphold the judgment and confinn the decree of the Court of Appeal. Before leaving this appeal, I am constrained to comment upon the lenQthof time and the voluminous materials includim.!1.i!e~HJr€ds ~~~produced, 1\.1 Government photocopied and presented in cou~s by co~nsel for the t and Bank of Uganda in their ingen~ous defences against the respondent's claim. The facts and circumstances of this case have always been simple, clear and admitted. Uganda, a sovereign state and its central bank, freely and willingly sent their emissaries to Spain looking for a loan which they got from the respondent, a respectable banking institution, and they accepted the tenns and conditions of that . loan which the Government received. In subsequent correspondence, the Government. findin!!it economically and financially difficult to meet its obligations under the loan agreement, the parties agreed to reschedule the repayment tenns. Thereafter, the Government and the Bank of Uganda suddenly turned round and disclaimed liability. In pursuit of technical points and questionable arguments and authorities, the 21 borrower and the sruarantor hired the services of advocates to delay the ~ repayments on sheer technicalities. It is now more than ten years and . after some seven volumes of records of proceedings and submissions in this court, and in courts below that this case has been finally disposed of in favour of the respondent. The state will now have to finally pay more than double in repayments of the loan, interest and costs, the sum of monev it had borrow:d, all at the expense of the Uganda taxpayer. There have been c~ses in the past and presumably there will be more such cases in the future, in which it is right and proper to plead and argue \.igorously for the sovereignty of the state of Uganda and in its defence and its institutions against all sorts of claims. In my opinion, however, this was not one of them. Dated at Mengo, this/.~~ay of ..J.~ 2002 .W. KANYEIJI.{AMBA JtTSTICE OF THE SUfRE~IE COURT THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA ATMENGO [CORAM: ODOK!, CJ; ODER; TSEKOOKO; KAROKORA AND KANYEIHAMBA, JJSC] CIVIL APPEAL NO I OF 200 I BETWEEN BANK OF UGANDA AND BANCO ARABE ESP ANOL APPELLANT RESPONDENT [Appeal from tlte decision oftlte Court of Appeal (Kato, Engwau, and Kitumba JJA) at Kampala, dated 20 October 2002, in CivilAppeal No. 23 of 2000J JUDGMENT OF ODOKI, CJ I have had the advantage of reading in draft, the judgment of Kanyeihamba JSC and I agree that this appeal should be dismissed with costs here and in the court below. As the other members of the Court agree with the judgment and orders proposed by Kanyeihamba JSC, this appeal is dismissed with costs here and in the courts below. ~~v ~e~~MengO this ...1. 1...~ .day of .~. ....2002 CHIEF JUSTICE THE REPUBLIC IN THE SUPREME OF UGANDA COURT OF UGANDA AT MENGO ( CORAM : ODOKI, C. J. , ODER, AND KANYEIHAMBA CIVIL - TSEKOOKC', KAROKORA LTJ.S. C. ) NO.1 OF 2001 APPEAL BETWEEN BANK OF UGANDA: .. AND .. .. .. .. .. .. APPELLANT BANCO ARABE ESP ANOL : RESPONDENT (An appeal from the decision of the Co;urt of Appeal at Kampala {Kato, Engwau and Kituraba, JJ.A} dated 20-10-2000, in Civil Appeal No. 23 ~f 2000). JUDGMENT OF ODER - JSC. I have had the advantage J. S. C. I of .ceadiw' in draft agree w.~~ th him that the judgment the appeal of Kanyeihamba, should be below. Dated at dismissed with costs here and in the courts Mengo this.. t'6 day of . . I\JA..-e. 2002. JUSTICE ~ OF THE SUPREME COURT .- h. - ----. REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT MENGO (CORAM: ODOK!, CJ, ODER, TSEKOOKO, ~ElHAMBA, JJ.S.C.) KAROKORA AND CIVIL APPEAL NO.1 OF 2001 BETWEEN BANK OF UGANDA ----------------------------AND BANCO ARABE ESPANOL ----------------------------RESPONDENT APPELLANT [An Appeal from the decision of the Court of Appeal at Kampala, (Kato, Engwau and Kutumba, JJ.A) dated 2 ()th October, 2000 in civil appeal 23 of 2000J. JUDGMENT OF TSEKOOKO, JSC: prepared conclusions by his Lordship, that the appeal I have read JSC, in draft and the judgment with his Kanyeihamba, should I agree fail and that the appellant ought to pay the respondent's costs here and in the courts below. As I see it, the central issue in these proceedings is clause 18(8.)of the loan agreement (Exh. P.1) between the Government of the Republic of Uganda and the respondent bank which loan agreement was executed by the parties on 11th November, 1987 in Madrid, Spain. acted as guarantor of the agreement guarantor. relates to the responsibility The appellant Clause 18 as in respect of the Government of Uganda. of the appellant It was provided in paragraph (a) thereof as follows: - 1 "We, the Bank of Uganda (the Guarantor), borrower, hereby unconditionallv guarantee the due and punctual a banking institution established under the laws of Uganda, and being the Central Bank of the and irrevocablv jointly and severally payment of any and all amounts in accordance payable by the BORROWER under the loan agreement with the provisions set forth herein. In the case of anv failure bv the BORROWER to punctuallv pav anv interest on, or principal of, or ::mv other amount due under the loan Agreement, we herebv agree on first demand made bv tested telex to cause such payment to be made to vou in compliance with the obligations of the Borrower. without raising Payment by the any exception or guaran tor shall be made to ARESBANK in the place and in the manner specified in ARESBANI-:'s demand, objection of whatsoever nature _nnnn_" (underlining mine). to pay to the failed to pay Clearly the appellant made a personal commitment respondent any amount which the Uganda Government regardless of any circumstances of the Uganda Governmen 1. that may lead to the default on the I?art Mr. Masembe-Kanyerezi learned counsel for the appellant relied on the decision of this court in the case of General Parts (U} Vs NonPerforminq Assets Recovern TnLst (S.Ct. Civ. Appeal 5 of 1999) in It is my opinion support of the proposition that the loan agreement lacked the seal of the Appellant and therefore the loan agreement is invalid. that General Parts case is clearly distinguishable. In the present case the appellant knew that the loan agreement was to be executed outside Uganda in the absence of the Governor and or the Bank Secretary who would authenticate the sealing of the loan agreement. Therefore the appellant gave powers of Attorney sealed and dated 5th November, 1987 to its official, George Nteeba, authorising behalf of the Appellant. him to sign the agreement on The official under the authority of the powers of 2 --- - .---..----.- Attorney given to him duly executed the loan agreement on behalf of the Bank. The power of attOrney did not require the official to authenticate the signing by affLxing the seal of the appellant. the arguments of Mr. Masembe-Kenyerezi that I am not persuaded by the loan agreement executed by an official having powers of Attorney is utra vires or that absence of the seal was a failure of execution. I think that in this case Article 126(2) of the 1995 Constitution would take care of such arguments. Mr. Masembe-Kan:yerezi was avoided payment guarantor because strenuously submitted that the guarantee of the there was extension of date of commencement as guarantor; that without the consent of the appellant was only entitled to payoff the loan on due date as set out in This obviously of clause loan under is an 18(a) any the loan agreement attractive (supra) exonerated of default submission makes the and then sue the principal. but in my opinion appellant liable to the wording pay the circumstances. I am not persuaded that whatever happened in this case due because the appellant from its liability to pay the amount by the Government. Accordingly I think that grounds 1 to 7 of the appeal must all fail. I would dismiss below. this appeal with costs to the respondent here and Delivered at Mengo this _n~~ daY~