THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL COURT DIVISION)

MISCELLANEOUS APPLICATION NO. 485 OF 2012

(Arising from Civil Suit No. 149 of 2010)

1. GLOBAL CAPITAL SAVE 2004 LTD
2. BEN KAVUYA                                              ] ::::::::::::::APPLICANTS

VERSUS

1. ALICE OKIROR
2. MICHAEL OKIROR                                    ] ::::::::::::::RESPONDENTS

BEFORE HON. LADY JUSTICE HELLEN OBURA

RULING

This application was brought under Order 43 rule 4 of the Civil Procedure Rules and Section 98 of the Civil Procedure Act for an order of stay of execution against the applicants by the respondents.

The grounds of the application are contained in the notice of motion and affidavit in support deposed by Mr. Ben Kavuya, the 2^nd respondent who is also the Managing Director of the 1^st applicant. The first ground is that the applicants intend to appeal against the judgment in favour of the respondents. Secondly that it would be in the interest of substantive justice if this Honorable court were to stay execution pending hearing and determination of the appeal by the applicants.

The respondents opposed the application and an affidavit in reply was deposed by the 2^nd respondent. An affidavit in rejoinder deposed by Johnny Patrick Barenzi, the 1^st applicant’s Company Secretary was also filed.

When this matter came up for hearing both counsel were directed by this court to file written submissions in the matter which they did hence this ruling. Counsel for the applicants submitted that the grounds of the application are set out in the notice of motion and affidavit in support the affidavit in rejoinder. He argued that although some of the grounds were not included in the notice of motion they are clearly stated in the affidavit in rejoinder. He prayed that the application be considered in the interest of justice and the amendment be allowed.

Counsel for the respondents objected to that prayer arguing that the applicants’ counsel had not sought leave of court to amend the notice of motion to reflect the said grounds under Order 6 rule 19 of the Civil Procedure rules.

I note that the notice of motion contains only two grounds while the other three are contained in the affidavit in rejoinder. Order 52 rule 3 of the Civil Procedure Rules provides;

“Every notice of motion shall state in general terms the grounds of the application and where any motion is grounded in evidence by affidavit, a copy of any affidavit intended to be used shall be served along with the notice of motion.”

In the case of Mugalula Mukiibi v Colline Hotel Ltd [1984] HCB 35 Manyindo J. considering a similar provision held that the above provision is mandatory and therefore the grounds of the application should be set out in the notice of motion.

Whereas I agree with counsel for the respondents that the application does not comply with order 52 rule 3 of the CPR, I do find that the post 1995 decisions have departed from the previous strict adherence to the rules of procedure in view of Article 126 (2) (e) of the Constitution. This is more so where the omission or commission of one party does not cause any prejudice to the other party.

One such decision was in the case of Horizon Coaches Limited v Edward Rurangaranga & Another [2010] 1 EA 77. In that case,Katureebe, JSC. while considering a similar matter where the grounds of the application was not stated in the notice of motion held that where the effect of adherence to technicality may have the effect of denying a party substantive justice, the court should endeavor to invoke the provisions of Article 126 (2) (e).

In the instant case, it is my view that while rejecting this application for non compliance with the rules would deny the applicants substantive justice, accepting the same and hearing the matter on its merits would not occasion any prejudice or injustice to the respondents. For that reason, I have taken into account the fact that the grounds introduced in the affidavit in rejoinder form the basis of the conditions that this application must meet. I have therefore considered those grounds although they are not stated in the notice of motion in order to have the matters in contention between the parties determined on its merits.

I now proceed to consider the merit of this application. Although Order 43 under which this application was brought applies to appeals to the High Court, in the case of Lawrence Musiitwa Kyazze v Eunice Busingye SC Civil Appeal No. 18 of 1990 which was an appeal to the Court of Appeal like the instant case, it was pointed out that the parties seeking for a stay of execution should be prepared to meet the conditions set out in order 39 rule 4(3), the current Order 43 rule 4(3) of the CPR.

Under Order 43 rule 4(3) of the CPR the court making an order for stay of execution must be satisfied:-

1. That substantial loss may result to the applicant unless the order is made;
2. That the application has been made without unreasonable delay; and
3. That security has been given by the applicant for the due performance of the Decree or Order as may ultimately be binding upon him or her.

The question for this court to determine is whether this application meets the above requirements. On the first condition, counsel for the applicants submitted that Ug. Shs. 360,000,000/= is a very substantial amount to extract from a business, hold as security for an indefinite period of time and hence the applicants will suffer loss given the tight economic situation prevailing in Uganda with high inflation and general money shortage. In reply, counsel for the respondents submitted that the applicants do not plead that a substantial loss may result.  

In the case of Tropical Commodities Suppliers Ltd and Others v International Credit Bank Ltd (In Liquidation) [2004] 2 EA 331 Ogoola J (as he then was) held that substantial loss does not represent any particular amount or size, it cannot be quantified by any particular mathematical formula. It refers to any loss, great or small, that is of real worth or value, as distinguished from a loss without a value or a loss that is merely nominal.

I have addressed my mind to the arguments of both counsels. It is not in dispute that the applicants operate a money lending business whose survival relies on availability of money to lend. Taking away Shs. 360,000,000/= from the applicants’ business by way of execution would no doubt disorganize its cash flow. I am therefore satisfied that the applicants will suffer substantial loss if this application is not granted. In that sense, this application meets the first condition above.

As far as the second condition is concerned, counsel for the applicants submitted that the applicants have been extremely diligent in lodging the appeal and in prosecuting this application as well as the application for an interim stay. Counsel for the respondents did not make any submissions in respect to this condition.

I am inclined to agree with the applicants’ counsel that the application has been made without unreasonable delay. The court’s decision sought to be appealed from in Civil Suit No. 149 of 2010 was delivered on 14^th June 2012. The applicants then applied for and were granted an interim order of stay of execution. Then on the 28^th June 2012 a Notice of Appeal was lodged in the Court of Appeal. On the 22^nd of August, this application was filed; a week after court vacation had ended. I am therefore satisfied that the application has been made without unreasonable delay.

Now turning to the third condition, counsel for the applicants submitted that the applicants deposited their land title of land comprised in Kyadondo Block 253 Plot 863 as security for due performance of the decree. It was further submitted that the applicants are willing to deposit further security in form of land of equal or higher value than the decretal sum.

Counsel for the respondents argued that the applicants have not shown that they have presented security for the due performance of the decree as may ultimately be binding on them. It was submitted for the respondents that the provisions of Order 43 rule 4(3) must be obeyed and in particularly the applicant must furnish security for due performance of the decree. See LawrenceMusiitwa Kyazze v Eunice Busingye (supra); New Vision Newspaper v J.H Ntabgoba [2004] KALR 481; Uganda Commercial Bank Ltd v Ssanyu and Another [1999] KALR 804.

However some courts have taken a practical approach with regard to the third condition by insisting on security for costs rather than security for the due performance of the decree. See Tropical Commodities Suppliers Ltd and Others v International Credit Bank Ltd (In Liquidation) (Supra); Sewankambo Dickson v Ziwa Abby HCMA 178 of 2005.

Whereas the Supreme Court held in the caseLawrence Musiitwa Kyazze v Eunice Busingye (supra); that a party should meet the conditions set out in the provisions of Order43 rule 4(3) of the CPR, including furnishing security for the due performance of the decree, the same court appears to have modified the third condition to mean furnishing security for costs only. See Kampala Bottlers Ltd v Uganda Bottlers SC Civil Application No 25 of 1995; DFCU Bank v Dr. Ann Persis Nakate Lussejere(Supra).

Indeed this court must abide by the holding of the Supreme Court to the effect that the applicants should furnish security for costs rather than security for due performance of the decree. I am persuaded by the view of Ogoola, J (as he then was)  in Tropical Commodities Suppliers Ltd and Others v International Credit Bank Ltd (In Liquidation) (Supra) that the requirement is more just and insistence on a policy or practice that mandates security for the entire decretal amount is likely to stifle appeals especially in a commercial court where the underlying transactions typically lead to a colossal decretal amounts.

In the instant case, I find no evidence to show that the applicants deposited their land title of land comprised in Kyadondo Block 253 Plot 863 as security for due performance of the decree. It is not even clear what the value of the property is if at all it was deposited. No details have been given about the alleged deposit of the security. This court has not been helped to find the security deposited satisfactory as required by the rules. Nonetheless the applicants are willing to deposit further security in form of land of equal or higher amount than the decretal sum situate at Plot 15 Solent Avenue Mbuya in the 2^nd applicant’s name. 

I am aware of the strict view that furnishing security must be fulfilled before or at the filing of the substantive application to stay execution as was held by Akiiki-Kiiza J. in the case of Uganda Commercial Bank Ltd v Ssanyu and Another (supra). However, courts have also granted a stay of execution subject to depositing the security as ordered. See Tropical Commodities Suppliers Ltd and Others v International Credit Bank Ltd (In Liquidation) (Supra); Sewankambo Dickson v Ziwa Abby (Supra).

Persuaded by those two authorities, this court would be inclined to grant the applicants conditional order of stay of execution. In those two cases, that is, Tropical Commodities Suppliers Ltd and Others v International Credit Bank Ltd (In Liquidation) (Supra); Sewankambo Dickson v Ziwa Abby (supra), the respective learned judges ordered a deposit into court of the amounts that represented about 10% of the decretal sum.

In the instant case, since the applicants are willing to deposit title for land almost worth the decretal sum or higher value, I will increase the percentage slightly and order the applicants to deposit Shs. 50,000,000/= (Shillings fifty million only) in court as security for costs against the decretal sum of Shs. 360,000,000/=. This amount represents about 14% of the decretal sum.

My decision to allow this application was also fortified by the principle that 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 stated in the case of Wilson v Church (1879) Vol. 12 Ch D 454and was followed by the Court of Appeal in DFCU Bank Ltd v Dr. Ann Persis Nakate Lussejere, Civil Appeal No. 29 of 2003where it was 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.

In the instant case, it would be the most unfortunate situation if the applicants succeed on appeal while the money lending business has succumbed to the execution process. There is no doubt that the applicants would suffer substantial loss if execution of the decree is not stayed pending disposal of the appeal.

In the result, this application is allowed on condition that the applicants deposit a sum of Ug. Shs. 50,000,000/= (Shillings Fifty Million only) in court as security for costs within 30 days from the date of this Order, in any case not later than 23^rd March 2013. Failure to do so, the respondents will be at liberty to proceed with execution of the decree.

The costs of this application are awarded to the respondents.

I so order.

Dated this 22^nd day of February 2013.

Hellen Obura

JUDGE

Ruling delivered in chambers at 3.00 pm in the presence of Mr. Gilbert Nuwagaba for the applicants who were also present. Both respondents and their advocate were absent.

JUDGE

22/02/13