THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL COURT)

MISCELLANEOUS APPLICATION NO. 629 OF 2011

(Arising from Civil Appeal No.19 of 2011)

                                                                                        M.M SHEIKH DAWOOD::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::APPLICANT

VERSUS

                                                                                         V.G. KESHWALA &SONS::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::RESPONDENT

BEFORE THE HON. LADY JUSTICE HELLEN OBURA

RULING

This application was brought under Order 43 rule 4 (1), (2), (3) & (4) of the Civil Procedure Rules (CPR), section 98 of the Civil Procedure Act (CPA) and section 33 of the Judicature Act (JA). The applicant is seeking for an order for stay of execution of the taxed bill of costs in Civil Appeal No. 14 of 2009 pending the determination of the applicant’s appeal. The application is supported by an affidavit sworn by Mr. Byrd Ssebuliba an advocate in the firm representing the applicant.

The brief grounds of the application as contained in the notice of motion and affidavit in support are that:-

• The applicant has filed Civil Appeal No. 19 of 2011 against the whole taxation decision in Civil Appeal No. 14 of 2009.
• The applicant proceeded in Civil Appeal No. 14 of 2009 on the understanding that the respondent had legal capacity to sue and be sued as the respondent had successfully opposed the proceedings before the Registrar of Trademarks.
• By Mr. V.G. Keshwala’s admission in his affidavit in support of Misc. Application No. 543 of 2011, Keshwala & Sons does not exist in law implying that all the earlier proceedings in Civil Appeal No. 14 of 2009 in which the respondent was a party was null and void.
• The applicant’s appeal has merit and has a high probability of success as it raises serious questions of law.
• The applicant shall suffer substantial loss if the order for stay of execution of the taxed bill of costs pending the determination of the appeal is not granted.
• This application has been made without unreasonable delay.
• It is just, fair and equitable that an order for stay of execution doth issue against the respondent.

An affidavit in reply and a supplementary affidavit in reply were sworn by Mr. Roscoe Yiga an advocate in the firm representing the respondent. He deposed that:-

• This application has no merit as it is a nullity in law and only intended to deny the respondent the fruits of being a successful party in litigation.
• The appeal has no probability of success and is just an abuse of court process since the essence of taxation appeal is strictly concerned with whether the right principles of taxation were followed in arriving at the quantum and not the legality of parties.
• It is not true that the respondent does not legally exist as alleged and moreover it was the applicant who filed Civil Appeal No. 14 of 2009 against the respondent.
• The proceedings in Misc. Application No. 543 of 2011 to amend proceedings in Civil Suit No. 43 of 2010 do not in any way affect the costs of the respondent in a matter that has already been concluded and not appealed against.
• The applicant has brought this application without clean hands as he is also seeking costs awarded to him against the respondent in Misc. Application No. 543 of 2011, yet on the other hand he is denying costs to the respondent. A copy of the applicant’s taxed bill of costs was attached as annexture “A” to the supplementary affidavit in reply.
• The applicant will not suffer any substantial loss if this application is not granted.

An affidavit in rejoinder was sworn by Mr. Moses Byaruhanga an advocate in the firm representing the applicant. He mainly controverted what was stated in the affidavits in reply by reiterating what was already stated in the affidavit in support. The new additions were that:-

• Court had established that the respondent does not legally exist. The ruling in Misc. Application No. 543 of 2011 was attached as annexture “B”.
•  The proceedings between the respondent was started by the respondent who opposed the registration of the applicant’s trademark before the Registrar of Trademarks and the applicant appealed against the decision.
•  The principles of taxation were not followed at all and before commencement of the taxation the registrar was duly informed about the non-existence of the respondent.
• Court cannot condone an illegality which escaped the eyes of the trial court but discovered later in the final stages of proceedings.

At the hearing of this application Mr. Peters Musoke represented the applicant while Mr. Friday Kagoro Robert appeared for the respondent. Mr. Musoke referred to the Supreme Court case of Muhammed Kisule v Greenland Bank (in liquidation) Civil Application No. 10 of 2010  and submitted that in an application for stay of execution the applicant must satisfy court on three points namely that:-

1.  Substantial loss would occur to the applicant unless an order for stay is made.
2. The application has been made without undue/unreasonable delay.
3. The applicant has given security for the due performance of the decree or order.

As regards the 3^rd point, he submitted that the applicant had already deposited security for costs in court. He referred to paragraph 3 of the affidavit in rejoinder which refers to annexture “A” thereto being a letter from M/S Shonubi Musoke &   Company Advocates dated 18/12/2011 by which two DTB Bank Drafts for a total sum of Shs. 27,170,950= were forwarded to court in accordance with an interim order dated 16/12/2011.  He submitted that the condition stipulated under the 3^rd point had been fulfilled in time so whatsoever happens, the money is already in court.

As regards the 2^nd point, he submitted that this application was brought without undue delay as it was filed on 4/11/2011 and the taxation decision had been made on the 2/11/2011. 

On the 1^st point, he referred to the bill of costs being annexure “B” to the application.  He contended that in that annexure, on item 1, the instructions fee is given as Shs. 2 billion. He submitted that if this application is not granted the applicant is likely to pay more money than it would have if proper taxation principles were followed.

He contended that the registrar erroneously based her taxation on a figure of Shs. 2 billion and arrived at a wrong figure of Shs. 20,000,000= and yet the correct amount would have been Shs.5,000,000= if the correct figures as stated in the plaint were used.

He referred to paragraph 1 of annexure “C” (being the plaint in Civil Suit No. 43 of 2010) where the parties are stated as V.G Keswala & Sons v M.M. SheikDawood and submitted that from the averment in that plaint, the plaintiff is not incorporated but it is carrying on business in Uganda.   He pointed out that when counsel for the plaintiff realized that error, he applied to amend the plaint by bringing in a new plaintiff called V.G Keswala t/a V.G Keshwala & Sons in Misc. Application No. 543 of 2011 which was heard and not allowed.  The ruling in that application was attached as annexture “B” to the affidavit in rejoinder. 

He contended that at page 29 of that ruling, the presiding judge was not convinced whether the plaintiff in Civil Suit No. 43 of 2010 was registered or not. He argued that an illegality is being brought to the attention of this court and basing on the authority of Makula International court cannot ignore it.  He concluded his submission on this point that if this application is not granted the applicant is likely to pay costs to a non- existent party.

On the question of probability of success, he submitted that there are two grounds of appeal whereby there is an alternative prayer for setting aside the taxation decision which was based on a wrong figure.  He reasoned that even though the ground based on non-existence of the respondent does not succeed at least the 2^nd ground of basing on the wrong figure which led to exorbitant award has high chance of success.

On the basis of the above submission, he prayed that this application be granted pending the hearing of the appeal against the taxation decision and costs be in the cause.

Mr. Kagoroopposed this application and based his submission on the affidavits in reply. He submitted that the applicant had raised 3 grounds upon which such an application must be granted but neglected to include the 4^th ground which is substantial.  It is to the effect that the applicant must show that the appeal has a high chance/probability of success.

He conceded that the applicant had deposited money in court as well as brought this application without delay. He however, pointed out that the respondent’s problem is the question of substantial loss and probability of success of the appeal.

He submitted that in Dr. Muhammed Kisule case (supra) it was decided that for an order of stay of execution to be granted, the applicant must show that the intended appeal has high chance of success. He contended that the appeal has no high chance of success. The appeal was brought under Section 62 of the Advocates Act, Cap. 267 which is restricted to a numerical value of how much was awarded and if the taxing officer in awarding the taxation misguided herself or there was an error.

He submitted that you cannot challenge the legality of a party in a taxation hearing.  Further that the applicant had not come to court with clean hands because Civil Appeal No. 14 of 2009 that was dismissed with costs to the respondent was instituted by the applicant.  He argued that the applicant cannot come to court and argue that it sued a non-existent party when the appeal was dismissed and the applicant did not appeal against the dismissal.

He submitted that it is trite law that an order of court remain an order of court until set aside by a court of competent jurisdiction.  He further submitted that the order dismissing Civil Appeal No. 14 of 2009 remains valid until set aside. This was the decision in Court of Appeal Civil Appeal No. 109 of 2004Amrit Goyal-vs-Harichand Goyal & Others.  He concluded his submission on this point by stating that this application and the appeal are incompetent and as such the applicant’s appeal has no probability of success.

As regards Civil Suit No. 43 of 2010 and Misc. Application No 543 of 2011, he submitted that those matters are different from this case and issues concerning them should not be imported into this matter that was already decided and not appealed against.  He prayed that this application be dismissed with costs to the respondent on the ground that the appeal has no probability of success.

I have looked at this application, all the affidavits and the documents attached thereto and carefully considered the submissions of both counsels and the authorities relied upon. This application was brought under Order 43 rule 4 (1)-(4) of the CPR which gives court discretionary power to grant an order for stay of execution of the decree appealed against upon sufficient cause being shown. The applicant must satisfy court on the three conditions stated under rule 4 (3) of Order 43 as well as in the case of Dr. Muhammed Kisule (supra) relied upon by counsel for the appellant.

As submitted by counsel for the applicant and conceded to by counsel for the respondent, the applicant has met the 3^rd and 2^nd conditions by depositing money in court and bringing this application without delay. However, as correctly pointed out by counsel for the respondent, case law has added a very essential condition that the applicant must meet in such an application, namely that; the appeal must have a likelihood of success. In Dr. Muhammed Kisule (supra) the application for stay of execution was dismissed with costs on the ground that the applicant had failed to show that his pending appeal had likelihood of success and that he would suffer irreparable loss if a stay was not granted.

In the instant application, counsel for the applicant submitted that the applicant’s appeal has high chance of success because it has two grounds; one based on the non-existence of the respondent and the other on failure by the registrar to follow the correct taxation principle thereby arriving at a higher figure. Counsel for the respondent on the other hand contended that the appeal has no likelihood of success for the reasons already stated in his submission above. He only concentrated on the issue of non-existence of a party which, in my view, he corrected submitted could not be challenged in an appeal against a taxation ruling.

In any case the ruling of Madrama, J in Misc. Application No 543 of 2011 relied upon by the applicant is not at all helpful because the judge did not pronounce himself on the legal status of the respondent. He instead ruled that it required more evidence to be adduced to prove. From the last sentence on page 28 to page 29 of his ruling the judge stated thus:-

“Apart from the addition of the word “sons” the business name and the surname of the applicant are the same. Secondly, the record of the court reveals that there is a contradiction leading to doubt as to whether the names “V.G. Keshwala & Sons” belongs to a partnership or a sole proprietorship. I therefore agree with the respondent’s that this is not a question of a bona fide mistake or a misnomer which may be cured by amendment. It concerns the identity of the applicant as to whether it is truly a sole proprietorship or a partnership. If it was a partnership before and has now become a sole proprietorship, more facts have to be disclosed. It is my finding that there was no misnomer. In any case the trademark is in the names of V.G. Keshwala and Sons and the case of Ramji v Jessa (supra) suggests that it is not fatal per se to sue in the names of the business subject to the requirement of order 30 rule 1 or 10 and the provisions of the Business Names Registration Act cited above and the right of amendment without prejudice. I am not prepared at this stage to decide whether the suit is a nullity or an irregularity on record without further evidence or submission”. (Emphasis added).

Clearly, from the judge’s conclusion on this matter as quoted above there was no pronouncement on the legal status of the applicant in that case (the respondent herein). There is even no basis for drawing an inference that the respondent does not exist. I do not therefore at this stage, see the basis for the applicant’s 1^st ground of appeal and I find that it does not have any likelihood of success.

As regards the 2^nd ground of appeal to do with failure to follow the correct taxation principle, counsel for the respondent did not address court on this point. I agree with counsel for the applicant that if at all the registrar was misguided to use a wrong figure other than what was claimed in the suit then that ground of appeal has a likelihood of success. Unfortunately, I did not have an opportunity to look at any of the documents relating to Civil Appeal No. 14 of 2009 whose taxed costs is being appealed against because none of the documents was attached to the affidavits or even referred to by any of the parties.

It was only the plaint in Civil Suit No. 43 of 2010 that was attached to the affidavit in support of this application and the claim therein said to be the basis of which the instruction fees should have been taxed.  Civil Suit No. 43 of 2010 is still pending before court so I do not quite fathom why the claim therein would be the basis for taxation of costs in a concluded matter. At the same time, counsel for the respondent has not addressed this court on how the value of the subject matter of Shs. 2 billion was arrived at. Further evidence needs to be adduced to show where that figure came from and this can only be done at the hearing of the appeal itself. Without delving so much into the merits of this ground of appeal at this stage and risk prejudging it, I find that the second ground of appeal raise serious issues that merit consideration by the appellate court.

This finding was based on the view that the same principle that applies when determining whether there are traible issues in an application for a temporary injunction and for leave to appeal similarly applies in an application for a stay of execution like this one. This is because at this stage of hearing the application in all these instances, court is not trying the substantive issues in the appeal or main suit but is concerned about preserving the right of appeal or hearing of the main suit.To that end, court is concerned with the question as to whetherprima facie it appears that there are traible issues or grounds of appeal which merit serious judicial consideration. (See the holdings in Sango Bay Estates Ltd & Others v Dresdner Bank AG (1972) EA 17 as per Spry V.P. at page 40 and Alley Route Ltd v UDB HCMA No 634 of 2006 (2)).

The case of Wilson v Church (1879) Vol. 12 Ch D 454as quoted by Madrama, J in Souna Cosmetics Ltd v The Commissioner Customs URA & Another Misc. Application No. 424 Of 2011 (Arising From Civil Suit No. 267 Of 2011) states the principles for preserving the right of appeal or the rights of hearing in the following words:-

“As a matter of practice, where an unsuccessful party is exercising an unrestricted right of appeal, it is the duty of the court in ordinary cases to make such order for staying proceedings in the Judgment appealed from as will prevent the appeal if successful from being rendered nugatory.”

This principle was followed by the Supreme Court in Somali Democratic Republic v Anoop Sunderial Trean C.A No. 11 of 1988 where it was held that where an unsuccessful party is exercising a right of appeal, it is the duty of the appellate court to prevent the appeal from being rendered nugatory. The holding of Cotton Lord Justice in Wilson v Church (Supra) at page 458 to the effect that the court would order a stay of execution in order to preserve the applicants right of appeal so that it is not rendered nugatory was quoted with approval.

Similarly, in DFCU Bank Ltd v Dr. Ann Persis Nakate Lussejere, Civil Appeal No. 29 of 2003 the Court of Appeal emphasized that it is the paramount duty of a court to which an application for stay of execution pending an appeal is made to see that the appeal, if successful is not rendered nugatory.

Following the above principle, I am convinced that since the 2^nd ground of the applicant’s appeal raise serious questions to do with the figures used to tax the instruction fee, this court needs to protect it from being rendered nugatory by granting a stay of execution of the taxed bill of costs.

As regards the 1^st condition concerning substantial loss, it follows that if this application is not granted and execution takes place the appeal will be rendered nugatory. This, in my opinion, will cause substantial loss to the applicant if he is the successful party because he would have already paid the taxed costs.

In the circumstances, I find that the applicant has met all the conditions for grant of a stay of execution and the orders sought by this application shall be granted. In the result, the execution of the taxed bill of costs in Civil Appeal No. 14 of 2009 is stayed pending determination of Civil Appeal No. 19 of 2011.  Costs of this application shall be in the appeal.

I so order.

Dated this 2^nd day of March 2012.

Hellen Obura

JUDGE 

Ruling delivered in chambers at 4.00 pm in the presence of Mr. Andrew Kibaya h/b for Mr. Peters Musoke for the applicant and Mr. Friday Kagoro Robert for the respondent.

JUDGE

2/03/2012