THE REPUBLIC OF UGANDA,

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISCELLANEOUS APPLICATION NO 110 OF 2012

(ARISING FROM MA 37 OF 2012)

(ARISING FROM CIVIL SUIT NO 16 OF 2011)

KASESE COBALT COMPANY LIMITED} …………………………………..APPLICANT

VERSUS

NATIONAL FORESTRY AUTHORITY} ………………………….……...RESPONDENT

BEFORE HON. JUSTICE CHRISTOPHER MADRAMA

RULING

The Applicant filed this application under order 36 rule 11 and order 52 of the Civil Procedure Rules for orders that the judgment and decree passed in civil suit number 16 of 2012 be set aside; that the Defendant be granted unconditional leave to appear and defend Civil Suit No 16 of 2012; execution in said suit be stayed and for costs to be provided for. Alternatively the Applicant's prays for an order for leave to extend time within which to file an application for leave to defend the suit.

The grounds of the application are that the Applicant has a liaison office in Kampala and was served summons to file a defence which was received by the secretary in the Kampala liaison office on 17 January 2012 and sent to Kasese where it was received on 19 January 2012. The Applicant then sent to the summons to its advocates who noted 19 January 2012 as the date of receipt of the summons. Thereafter the Applicants advocates put in application for leave to appear and defend in time on 30 January 2012. The Respondents advocates received the application in protest citing the reason that the matter had been concluded. The Applicants advocates later discovered that judgment in the matter had been passed and was under execution. That the mistake of the Applicant’s advocate should not be visited on the Applicant. Furthermore that there are triable issues of fact and law and therefore the Applicant should be granted an extension of time to file an application for leave to appear and defend the suit. That is just and equitable that the judgment and decree passed in civil suit number 16 of 2012 be set aside, and execution of the decree is stayed and the time within which to file the application for leave to appear and defend the suit be extended. The application is supported by the affidavit of Byrd Sebuliba, an advocate of the High Court practising with Shonubi Musoke and company advocates. The deponent principally repeats the grounds of the application. The deponent avers additionally that the Applicant put in an application for leave to appear and defend in time on 30 January 2012 and court set 14 March 2012 as the date to hear the application for leave to appear and defend. The Applicant’s advocates effected service of the application on the Respondents advocates received the application in protest on the ground that the matter had been concluded. The Applicant’s advocates thereafter tried to trace the file to ascertain the facts but failed to trace the file. The Applicant’s advocates later discovered that judgment in the matter had been passed and it was under execution. On 12 March 2012 the Applicant was served with notice to show cause as to why execution should not issue. The Applicant was to appear on 13 March 2012, a day before the application for leave to appear and defend was heard and show cause why execution should not issue.  He further avers that it is just and equitable that the judgment and Decree passed in civil suit number 16 of 2012 be set aside, execution of the Decree be stayed and the time within which to file an application for leave to appear and defended the suit be extended.

The affidavit in reply is sworn by Akampurira Jude Baks, a legal assistant working with Messieurs Akampumuza and company advocates. He avers that the notice of motion is riddled with falsehoods and is fatally defective. That the application is an abuse of the process of court and intended to delay the course of justice. That the Applicant and its officials had 10 days within which to instruct, draft, and present court, pay filing fees Lord and serve the application for leave to file a defence but simply chose to engage in dilatory conduct. That the Applicant has no plausible defence and shall be in equitable and unjust to aid the Applicant’s disobedience of the law. In a further supplementary affidavit in reply the deponent Peter Muloba avers that the fixing of the case by the Applicant has no basis. That the Respondents advocates were served with hearing notice for the application fixed for the 29 August 2012. The Applicant is asking the court to set aside a judgment and decree and to stay execution of the matter whose execution of the final orders of the court was concluded. The Applicant participated in execution proceedings during which its lawyers applied for and were granted an adjournment to enable them to show cause why execution should not issue but they never turned up on the appointed day and execution issued. The Applicant never challenged the orders of execution. The Respondent applied for a change of mode of execution to garnishee and garnishee proceedings was determined inter partes as between the Applicant and the Respondent. The Applicant was effectively served with the orders of court. Consequently the Applicant was aware that execution was completed way of garnishee orders. Furthermore the principal judge advised the Applicant that execution was completed in that it could not stop it administratively that the Applicant should follow the judicial process and file an application and further undertook to have it heard immediately during court vacation if they had any basis but it failed. The Applicant continuing with this application is a waste of courts available time and an abuse of the process of this honourable court.

At the hearing of the application the Applicant was represented by Peters Musoke while Dr Akampumuza represented the Respondent.

Dr Akampumuza objected to the application. He argued that the application seeks to set aside a judgment and decree in civil suit number 16 of 2012 while at the same time seeking unconditional leave to appear and defend the suit and for stay of execution. He contended that it was an omnibus application for several orders. It was seeking to set aside and at the same time seeking to stay. Counsel contended that the order for stay of execution was not achievable because execution was completed by way of garnishee order absolute.

Secondly, the Applicants seeks to set aside the judgment and decree in the main suit and also to be granted unconditional leave. Counsel contended that the Applicant ought to have brought a fresh application as advised by the Principal Judge. They cannot continue with the application for stay of execution after execution was completed. Such application as it stands is incompetent and cannot be entertained by court. Counsel further contended that one cannot set aside a decree whose execution has been completed. Counsel submitted that the proper application should have been an application to set aside execution under order 36 rules 11 of the Civil Procedure Rules.

Under order 36 rules 11 there has to be satisfaction of court that the service of summons was not effective or for some other good cause. Even though the court has discretion, such discretion can only be exercised if the court has been satisfied. The court can only be satisfied if there has been moved to grant a given order which includes an order for setting aside the decree, and execution. Execution cannot be set aside if it has been completed.

The application was filed when there was a pending execution process.

In reply learned Counsel Peters Musoke submitted that under order 36 rules 11 the court has power to stay a decree or to set it aside if necessary. In the Applicants case, the application was filed before the decree was executed. Secondly even if the decree has been executed, the court has power to set it aside and once it's set it aside the money has to be paid back. As far as the omnibus nature of the application is concerned, Counsel submitted that it is the practice of the commercial court division to bring applications of this nature. He referred to the case of Kanakulya Joseph versus Africa Polysack industries Ltd miscellaneous application number 215 of 2011. In this particular case the Applicant brought several applications under order 36 rules 11. The Applicant is seeking for orders that execution is stayed. That the default judgment entered against the Applicant in the suit be set aside and for unconditional leave to appear and defend the suit. The whole idea is to prevent a multiplicity of suits. The procedure is the same and it is by notice of motion. It was not necessary to have many notices of motion in the commercial court because the whole idea is to make justice to be done and done quickly and effectively. Additionally learned Counsel submitted that the court has powers under order 36 rule 11 to make any order that it thinks is fair and just in the circumstances of the case. The application for stay was brought in time but was not heard because of circumstances.

Ruling

The Respondent’s objection to the application is only a preliminary point of law that the application is incompetent and should not be heard.  The thrust of the objection is that execution has been completed.  Secondly that execution cannot be set aside because there is no application to set aside execution in terms of order 36 rules 11 of the Civil Procedure Rules.

The Applicants application is filed under order 36 rules 11 of the Civil Procedure Rules.  Order 36 rule 11 reads as follows:

            “11. Setting aside the Decree

After the Decree the court may, if satisfied that the service of summons was not effective, or for any other good cause, we shall be recorded, set aside the Decree, and if necessary stay or set aside execution, and may give leave to the Defendant to appear to the summons and to defend the suit, if it seems reasonable to the court so to do, and on such terms as the court thinks fit.”

The Applicants application seeks all the orders mentioned in the rule 11.  Order 36 rules 11 gives the court discretion upon satisfaction that service of summons was not effective, or for any other good cause, which shall be recorded to set aside the Decree.  The Decree may be set aside irrespective of whether execution proceedings were going on or whether they had been completed.  Consequently, the rule caters for different kinds of scenarios.  Where no execution has taken place, it would be sufficient to set aside the Decree.  However where execution proceedings are on-going, the court may stay execution.  Where execution has been completed, it may be set aside the execution.  Additionally, the court may give leave to the Defendant to appear to the summons and to defend the suit if it seems reasonable for the court to do so. 

The Applicant has not sought an order to set aside execution. The Applicants application was filed on the court record on 13 March 2012 when execution had not been completed. The facts averred in the notice of motion are that the Applicants advocates discovered that judgment had been issued and was under execution. There is no averment that execution had been completed. The facts disclosed by the affidavit of Peter Muloba avers that the registrar of this court delivered judgment for the Plaintiff under order 36 rules 3 of the Civil Procedure Rules on 10 February 2012 for a sum of US$100,300 and for costs of the suit. An order is made under order 36 rules 3 of the Civil Procedure Rules upon default of the Defendant to apply for leave to defend the summary suit. Upon the application of the Plaintiff and on the 22nd day of March 2012 the registrar of the Execution and Bailiffs Division of the High Court ordered that execution issues. On the 21st day of June 2012 the registrar of the Execution and Bailiffs Division granted an interim order of stay of execution until further orders of the commercial court. He fixed the garnishee proceedings for 2 July 2012 at 3 PM for mention. Additionally the garnishee order nisi was issued on 13 June 2012. Annexure F to the affidavit of Peter Muloba is a letter dated 23rd of July 2012 from the Registrar Execution and Bailiffs Division of the High Court addressed to the Managing Director of Standard Chartered Bank which reads as follows:

"Reference is made to yours of even reference dated 19 July 2012 wherein you reported to having complied with the decree absolute as to the payment of US$100,300 and requested for advice on how to pay the interest.

This is to advise that interest of 6% per annum, and not 8% was to be paid on the US$100,300. That they amount to US$2508 and the same be paid to the decree holder."

Subsequently in a letter dated 30^thJuly 2012 the advocates for the Applicant Messieurs Shonubi Musoke and Company Advocates wrote to the Principal Judge complaining about partiality of the registrar Execution and Bailiffs Division in the way the garnishee order was made absolute. The basis of the complaint is that the registrar had passed an interim order of stay referred to above. Thereafter he proceeded to hear the matter for a garnishee order ex parte despite making an order for the parties to appear before him before making the garnishee order absolute. He heard and determined the matter during court vacation without a certificate of urgency. He ignored the fact that the matter had been fixed for 29 August 2012 to be conclusively determined. He went ahead to determine the decree absolute ex parte. Furthermore he taxed Uganda shillings 36,000,000/= against the Applicants ex parte.

The Principal Judge replied to the complaint and advised the Applicants to have any alleged wrong or improper or unjust decision remedied through judicial process. He advised them to consider moving court as by law established for appropriate reliefs. The letter of the PJ is dated 31st of July 2012.

The issue is therefore what appropriate reliefs the Applicant has. It is not in dispute that the garnishee order nisi was made absolute. The effect of a garnishee order absolute was considered by this court in the case ofUnique Holdings Ltd vs. Business Skills Trust Limited Miscellaneous Application No 402 of 2012.  In that application the court relied on the authoritative statement of the process in garnishee proceedings in the case ofChoice Investments Ltd v Jeromnimon (Midland Bank Ltd, garnishee) [1981] 1 All ER 225 at page 227.  Garnishee is a process of execution or attachment of debts under section 38 (c) of the Civil Procedure Act Cap 71 Laws of Uganda.  The process is prescribed by order 23 of the Civil Procedure Rules.  In the two step process the garnishee order nisi operates as an injunction freezing the amount due from the garnishee to the judgment debtor. The amount remains frozen until the garnishee is made absolute or until further orders of court.  The garnishee order absolute is an order to the garnishee to pay money to the judgment creditor.  Such payment upon the issuance and service of a garnishee order absolute on the garnishee is an absolute discharge of the garnishee in respect of the amount ordered to be paid.  Whereas payment of the judgment creditor is a valid discharge of the garnishee, it may be set aside or the Decree reversed under order 23 rules 7 of the Civil Procedure Rules.  Order 23 rule 7 of the Civil Procedure Rules provides as follows:

“Payment made by or execution levied upon the garnishee under any such proceedings as aforesaid shall be a valid discharge to him or her as against the judgment debtor to the amount paid or levied, although such proceedings or order may be set aside or the Decree reversed.”

Payment by the garnishee only results in the discharge of the garnishee as against the judgement debtor. It does not preclude further proceedings between the judgement debtor and the judgement creditor. Applications under rule 1 of order 23 are by summons in chambers.  Therefore applications to set aside or have the decree reversed are by notice of motion.  Order 23 rules 7 is complementary to order 36 rule 11 of the Civil Procedure Rules.  Both rules envisage circumstances where execution has been completed.  Order 23 is a general order which deals with the attachment of debts irrespective of the mode of proceedings.  In other words what is material to consider under order 23 is whether there is a judgment debt.  A judgment debtor arises from a judgment and it is irrelevant whether it is a default judgment or a judgment under order 36 rules 3 of the Civil Procedure Rules.  On the other hand order 36 deals with summary procedure.  Order 36 specifically deals with setting aside, reversal of the Decree or setting aside of execution arising by virtue of a judgment issued under order 36 of the Civil Procedure Rules.

I have carefully considered the Respondents objection to the application as currently framed.  It must be noted firstly that the application was filed before execution was completed.  Execution must have been completed after the 2^nd of July, 2012 when the garnishee order absolute was presumably issued.  In those premises, the application for stay of execution has been overtaken by events.  However rule 11 allows an omnibus application to be made which may result in stay of execution or setting aside of the Decree.  It is highly academic to consider stay of execution as crucial to the Applicants application, when the Applicant applied to set aside the Decree the foundation of the execution.  If the Decree is set aside, the foundation of the execution would have been removed.  The rule envisages setting aside the Decree and where necessary an order for stay of execution or setting aside execution.  For the moment, the evidence is clear that execution was completed and this occurred after the application to set aside the Decree had been filed.

Rule 7 of order 23 makes it clear that the garnishee bank was discharged.  It does not however rule out setting aside the garnishee proceedings or the decree. In other words completion of execution by the issuance of a garnishee order absolute is not a bar to setting aside the decree or garnishee proceedings. The application to set aside the judgment and decree in civil suit number 16 of 2012 has not been overtaken by events as completion of execution is not a bar to setting aside of the decree. Execution cannot be stayed but the Respondent can be ordered to pay back the money. In the words of order 36 rules 11 of the Civil Procedure Rules it is not necessary to set aside the execution. This is because execution was completed. No property has been transferred to a third party i.e. in the case of land. In this particular case there were merely garnishee proceedings for attachment of debts. The money attached was transferred to the Respondent. The dispute remains and the controversy to be tried is whether the judgment and decree passed in civil suit number 16 of 2012 be set aside.

In the premises, completion of the execution process only transferred money from the Applicants account to the Respondents account. The question of whether the decree and judgment should be set aside has been left open by order 23 rule 7 of the Civil Procedure Rules as well as order 36 rule 11. It may even not be necessary for the Applicant to amend the pleadings to include a prayer to set aside execution. However this goes on to show that it was not fatal to the Applicants application that execution was completed. Since the completion was subsequent to the filing of the application for stay of execution, the application at the time it was made was valid and left the option open to amend the pleadings to accommodate the new situation. This in my view would dispose of the Respondents preliminary objection. The rest of the issues are on the merits of the application i.e. as to whether there was effective service on the Defendant/Applicant of the summons. In the premises, the objection of the Respondent is overruled with costs and the application shall be heard on its merits.

Ruling read in open court this 25th day of September 2012

Hon. Mr Justice Christopher Madrama

Ruling delivered in the presence of:

Andrew Ankunda from Shonubi Musoke and Co. Advocates,

Charles Okuni Court Clerk

Sheila Catherine Abamu Research Assistant

Hon. Mr Justice Christopher Madrama

25^th September 2012