[2022] UGIC 84

# **THE REPUBLIC OF UGANDA IN THE INDUSTRIAL COURT OF UGANDA HOLDEN AT JINJA MISCELLENOUS APPLICATION NO. 008 OF 2021 (ARISING FROM LABOUR DISPUTE REFERENCE NO. O15 OF 2021) ⁵ (ALL ARISING FOM LABOUR COMPLAINT JJA/LAB/025/FEB/2021)**

**BUSOGA FORESTRY CO. LIMITED APPLICANT**

### **VERSUS**

**BATABANE ANATOLE RESPONDENT**

#### **10 RULING**

### **BEFORE**

- **1. THE HON. JUDGE, LINDA LILLIAN TUMUSIIME MUGISHA PANELISTS** - **i. MS. ROSE GIDONGO** - **15 2. MS. BEATRICE ACIRO**

### **3. MR. JACK RWOMUSHANA**

This application was brought by Notice of Motion under section 40(1) ofthe Labour Disputes (Arbitration and Settlement) Act 2006, Regulation 22(2) of the Labour Disputes (Arbitration and Settlement) (Industrial Court

**20** Procedure) Rules 2012, Rules 6(2) (b) 42 (1) & (2) and 44(1) ofthe Judicature

(Court ofAppeal) Rules S.i No. ¹³ - ¹⁰ section ³³ ofthe Judicature Act Cap. ¹³ and Order ⁵² Rule ¹⁸¹³ ofthe Civil Procedure Rules S.i ⁷¹ - 1)

For orders: -

- a) For Stay of Execution is issued by this Court staying execution ofthe Award and /or Decree ofthe Industrial Court entered against the Applicant in Labour Dispute Reference No. 015 of 2021 until final disposal ofthe Appeal lodged by the Applicant to the Court ofAppeal. - b) Costs ofthis Application be provided for.

The grounds ofthis Application are stated in the affidavit of Imran Nakueira and are summarised as follows;

- 1. The Applicant is aggrieved by the Award ofthe Industrial Court in Labour Dispute Reference No. 015 of 2021 and has filed an Appeal in the Court ofAppeal against the same. - **³⁵** success. 2. The Appeal raises matters of great importance and has high chances of - 3. If execution ofthe award/decree is not stayed, the said appeal will, if successful be rendered nugatory and the Applicant will suffer irreparable loss. - 4. The application is brought without inordinate delay. - 5. That the it is in the interest ofjustice that the Orders sought are granted.

## The Applicants case:

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The Applicants case as deposed in the Affidavit in support of **Imran Nakueira,** the Corporate Affairs Director ofthe Applicant and summarised as follows:

- i. That, the Applicant was the Respondent in **Labour Dispute Reference 015 of** 2021, in which an award was granted against it on 2/12/2021, with specific orders to pay inter alia; - a) UGX 68,364,000/= (Uganda Shillings Sixty Eight Million Three Hundred Sixty Four Thousand) as acting Allowance. - b) UGX 42,166,667/= (Uganda Shillings Forty-Two Million One Hundred Sixty Six Thousand Six Hundred Sixty Seven) as severance allowance. - c) UGX 37,950,000/= (Uganda Shillings Thirty Seven Million, Nine Hundred Fifty Thousand) as three months' notice. - d) UGX 120,000,000/= (Uganda Shillings One Hundred Twenty Million) as general damages. - e) Interest at a rate of 15% per year from the date of the Award till payment in full, in accordance with the award Marked "A" on the record. - **2.** That, the Applicant is aggrieved by the Award and or Decision whose import and effect will have a substantive and irreversible negative effect in the operations of the Applicant if implemented because payment of the amounts indicated in the award to the Respondent would put the Applicant out ofpocket in substantial amount ofmoney. - 3. **That,** the Applicant has filed a notice of Appeal and the Record of Proceedings has been sought to enable it file a Memorandum ofAppeal.

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"Bi" **and** "B2" attached on the record are, the Notice of Appeal and Letter requesting for the Record of Proceedings respectively).

- 4. That, based on their Lawyers, M/s Mpanga Advocates, he believes that, the proposed grounds ofthe Appeal in a draft Memorandum ofAppeal marked "C", are likely to succeed and if the decision ofthis court is not stayed, the appeal will be rendered nugatory. - 5. That, based on information from his lawyers AF Mpanga Advocates, he believes that the grounds of appeal are not of a frivolous nature but are substantive, and they raise matters of great public importance and therefore merit consideration by the Court ofAppeal. - 6. That, the Award to the Respondent is quite substantial and if execution is allowed and the money is paid to him, it will never be recovered in the event that the Appeal succeeds, thereby occasioning the Applicant irreparable loss. This is because the Respondent is out ofa job and would have no means of paying back the sums if execution was levied. - 7. That, he knows that, the Applicant enjoys an unfettered right to appeal the matter to the Court ofAppeal which will be rendered nugatory ifthe award ofthe Industrial Court is executed. - 8. Therefore, in the interest ofjustice the enforcement ofthe Award ofthis Court should be stayed until the appeal has been heard and determined.

# **The** Respondent's case

The Respondent's case as stated in his Affidavit in reply, is as follows:

i. That, for more than io years, he was employed as a Finance Manager which was the second position in hierarchy at the Applicant

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Company and he was only reporting to the Managing Director until, January 2021, when the Applicant constructively dismissed him.

- 2. Amitted that he sued the Applicant in this court and on 2/12/2021, Judgement was entered in his favour in the Amounts already stated by the Applicant above. - 3. That the award ofthis Court is yet to be enforced and the Applicant filed this application on 20/12/2021, when he had not yet applied for its execution. - 4. That while he was working with the Applicant, he got a salary loan of Ushs 170 Million, from Standard Chartered Bank (SCB), at a rate of 18% pa ofwhich Ushs 140 million is still outstanding. Therefore he is in need of the fruits of the award to enable him clear his outstanding loan obligations (including the ever increasing interest and penalties due to none payment). He attached a Confirmation ofthe Applicant's commitment to SCB, for the loan, Marked "B" on his Affidavit in reply. - 5. That the Applicant has not met the conditions prerequisite for grant of stay of execution and it has not deposited security of the entire decretal award sum in this court. - 6. That, Applicant's purported appeal has no merit and is intended to block him from accessing the fruits of his award and it would not suffer any damage if the award is executed

#### SUBMISSIONS

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115 Both Counsel filed written submissions which we considered and for which we thank them.

#### **DECISION OF COURT** ^I

# **The issue for determination by Court is whether the Applicant has adduced sufficient reasons to justify a stay of execution?**

- 120 125 130 It is trite that, an application for stay of execution is only intended to prevent the Judgement Creditor from putting into operation the legal process for execution but it does not deprive the successful decree holder from enjoying the fruits ofhis or herJudgement. This Court has jurisdiction to stay execution of its own awards on grounds that, an appeal is pending, ifit is satisfied that, the appeal has prospects of success and the Applicant/Appellant has no reasonable prospects of recovering the award, if stay of execution is not granted and the award /decree is executed. The Court in resolving such applications is also not barred from applying the Civil Procedure Rules. Order 43(4)(3) °fthe Civil Procedure Rules, provides the conditions which must be satisfied before an order for stay of execution may be granted by a Court as follows: - *a) Substantial loss may result to the party applyingfor stay ofexecution unless the order is made* - *b) The application has been made without unreasonable delay.* - *c) Security has been given by the applicant for due performance ofthe decree or order as may ultimately be binding upon him or her, as long the execution is made before the expiry of the time within which an appealfrom the decree should befiled.*

140 The most important consideration for Court to grant an order of stay of execution in the instant application is to ensure that, ifthe Applicant' Appeal is successful it is not rendered nugatory by the execution ofthis courts award. Therefore, the Applicant must adduce evidence to convince this Court that it will suffer substantial loss ifthe order is not granted.

We have carefully perused the Notice of Motion and the Affidavits in support and in opposition ofthe application, the submissions of both counsel and the law applicable, and we find as follows:

150 Regarding the condition of the likelihood ofsuffering substantial loss, ifthis application is not granted, the Applicant argued that the Respondent having lost his job and given his outstanding loan obligations, it was likely that it would not recover the award ifit succeeded on appeal, but execution was not stayed. The Respondent in his reply did not dispute this, in fact he confirmed that he was out of a job therefore, he needed to execute the award to enable him pay for his outstanding loan of Ugx. 140,000,000/- and ever-increasing interest.

160 4 55 i In the circumstances., it is highly unlikely that he would be able to refund the entire award if the Applicant succeeded on Appeal because he categorically stated that, he intends to pay a substantial amount of the award to the Standard Chartered Bank to settle his loan obligations. We are therefore satisfied that ifthe execution is not stayed the Applicant may suffer substantial loss. The applicant has satisfied this condition.

With regard to whether the appeal is not frivolous and has a likelihood of success. Not being a Court of Appeal, this court is not duty bound to review

the award or to consider its substance at this stage. Our role is to determine whether the grounds of Appeal have a probability of success or not. After carefully perusing the award and the grounds of appeal as set out in the proposed memorandum of appeal attached to the Application, we think that, the Applicant raises relevant appealable issues regarding constructive dismissal resulting from restructuring of an organisation, which would call for the Court of Appeal to determine. In the circumstances the applicant has satisfied this principle that the Appeal has a probability ofsuccess.

175 180 On issue whether the application is rendered moot for being made before execution proceedings were commenced by the Respondent, the award having been issued /delivered on 2/12/2021 and the notice ofAppeal having been filed on 6/12/2021 and the execution proceedings having commenced in January 2012, we think that, this would not render the application moot because the most important consideration is to ensure that the appeal is not rendered nugatory if execution is not stayed. Although there was no evidence of an eminent threat ofexecution, when the application was filed, the Applicant has already shown that it would suffer substantial loss and there was an eminent threat of not recovering the award if the appeal is successful that the Respondent is out of a job and he has a large loan that is outstanding with an ever-increasing interest. The circumstances of the Judgement creditor/Respondent as already discussed above are a threat to recovery ofthe award ofthe appeal succeeds.

185 Regarding the principle that the Applicant has given sufficient security for due performance, the Applicant contested the requirement for it to deposit

security for due performance on grounds that it is a credible, duly licenced Company doing business as a going concern and law abiding. We associate ourselves with the the Hon. Justice Dr. Flavian Zeija's (as he then was) holding in John Baptist Kawanga v Namyalo Kevina and Ssemakula Laurence (spura) to the effect that,

*"... The objective ofthe legal provision on security was never intended to fetter the right ofappeal. It was intended to ensure that courts do not assist litigants to delay execution of decrees through filling vexatious and frivolous appeals. Therefore, the decision whether to order for security for due performance must be made in consonance with the probability ofthe success ofthe appeal and on the facts ofeach case as the situations varyfrom case to case.*

200 In the circumstances of this case, even if Court were to believe that the Applicant was ofhigh repute, as already stated above, the purpose of ordering a deposit ofsecurity is not a bar the Applicant from proceeding with its Appeal but to ensure that the Judgement creditor is not deprived ofenjoying the fruits of his or her Judgement.

205 210 The Applicant in the instant application did not adduce any evidence of its financial status, to enable us determine whether to order the deposit of security for due performance or not. In our considered opinion, it is not sufficient for the Respondent to only state that it is a duly licensed Company doing business as a going concern and of high repute without demonstrating its financial status. In any case, even if we were to consider it as such and even ifits appeal has prospects ofsuccess, it has no control on the duration of the

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hearing and determination of the appeal. In the circumstances, the Applicant is ordered to deposit a bank guarantee in a reputable bank acceptable to the Respondent as security for due performance for the whole decretal amount together with accruing interest as awarded until the determination of the Appeal. This is to ensure that in the event that the appeal does not succeed the Respondent will recover the full award ofthis court.

In conclusion, given the statement by the Respondent that he is unemployed and he needs to execute his award to settle his outstanding loan obligations amounting to Ugx. 140,000,000/- with the ever-increasing interest rates, we accordingly grant this application and order as follows:

- **1.** The Applicant shall provide a Bank Guarantee as security for due performance in from a reputable Bank acceptable to the Respondent, providing for the entire decretal sum within ²¹ days from this ruling. - 2. No order as to costs is made.

²²⁵ Delivered and signed by:

**PANELISTS i. MS. ROSE GIDONGO 2. MS. BEATRICE ACIRO 3. MR. JACK RWOMUSHANA DATE: 7/04/2022 i. THE HON. JUDGE, LINDA LILLIAN TUMUSIIME MUGISHA**

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