[2021] UGSC 14

# THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT **KAMPALA**

### **CIVIL APPLICATION NO 30 OF 2021**

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(Arising from Civil Application No. 29 of 2021) (Arising from Court of Appeal Civil Application No.100 of 2021) (Arising from High Court Civil Suit No. 721 of 2021)

#### **BETWEEN**

### **CHINA HENAN INTERNATIONAL**

## COOPERATION GROUP CO. LTD::::::::::APPLICANT

#### **AND**

#### JUSTUS KYABAHWA::::::::::::::::::::::::::::::RESPONDENT 20

(Being an application for an interim stay of execution of the decree in HCCS No. 721 of 2020)

#### **RULING OF ARACH AMOKO, JSC**

This ruling relates to a Notice of Motion that was filed in this Court on behalf of **CHINA HENAN INTERNATIONAL** $25$ **COOPERATION GROUP CO. LTD** (the applicant) under Section 6 of the Judicature Act, Rules 2(2) and 42(1) of the Rules of this Court. The orders sought are that:

> 1. An interim stay of execution be issued staying the decree in **Civil Suit No. 721 of 2021** pending the *hearing of the main application.*

# 2. Costs of the application be provided for.

The grounds of the application are set out in the Notice of Motion and explicated in the supporting affidavits sworn by Zhang Jinpal, the applicant's country manager but in brief are that:

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- a) The applicant was the unsuccessful party in **HCCS No.** 721 of 2021. - b) The applicant filed a Notice of Appeal in the Court of Appeal against that decision. - c) The applicant also filed an application for a stay of execution of the decree in that case in the Court of Appeal vides Court of Appeal Civil Application No. 100 of 2021. - d) The Court of Appeal dismissed that application. The applicant was dissatisfied with the decision of the Court of Appeal, and lodged a Notice of Appeal in this Court. - e) The applicant also applied for a stay of execution in this Court. - f) The applicant has also requested for the Record of Proceedings form the Court of Appeal in respect of Court of Appeal Civil Application No.100 of 2021 for purposes of executing the appeal. - g) There is an eminent threat of execution as the respondent is in possession of a garnishee order nisi

- attaching the applicant's account in Guaranty Trust Bank (U) Ltd and is in the process of making it *absolute.* - h) The applicant's application before this Court high chances of success. - 10

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i) It in the interest of justice that this application is granted.

The respondent opposed the application in his affidavit in reply where he described it as legally baseless, bad in law, frivolous and vexatious and an outright abuse of Court process and put the applicant on notice that his lawyers 15 would, at the hearing raise a preliminary objection that:

- a) The applicant does not have a right of appeal to the Supreme Court from an interlocutory order of the Court of Appeal. Consequently, its Notice of Appeal is incompetent and the main application for stay of execution from which the application emanates has no legal leg to stand on. There is therefore no competent main application and /or appeal to preserve. - 25

b) The execution against which the application for stay of execution is made to this Court is not that of the Court of Appeal but of the High Court decree in HCCC No. 721 of 2020. Accordingly the application is misplaced.

c) The order of the Court of Appeal in Civil Application No.100 of 2021 is not capable of being executed and therefore, there is nothing to stay execution of.

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In further answer to the affidavit of the applicant, the respondent averred that the decree nisi against the 10 applicant and GTB Bank had since been made absolute. The execution in respect of the said decree nisi is therefore complete and there is therefore, nothing to stay execution about. He also stated that the Court of Appeal had considered the application for stay in Court of Appeal in $15$ Civil Application No. 100 of 2021 in its totality including the order nisi in respect with GTB Bank and had held that the applicant had failed to demonstrate a likelihood of success of the application before that Court, which is a key element in of an application for stay of execution. It is 20 therefore not true that the Court of Appeal did not consider the decree nisi in respect of GTB Bank as alleged by the applicant.

He stated further that the applicant is aware that interest continues to accrue on the decretal sum and the decretal 25 amount as at 14^th June, 2021 was USD 1,550,000, without the taxed costs. He stated that he would not retain any money paid to him over and above the decreed sum and he would immediately refund any excess to the applicant. He

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concluded that it is just, fair and equitable that the $\mathsf{S}$ application be dismissed with costs.

Mr Zhang Jinpai in his additional affidavit filed on 1^st June 2021, acknowledged that the respondent had indeed obtained a garnishee order absolute against GTB Bank on the 18^th June, 2021. He however, contended that the money was still on the applicant's bank account at the time of hearing as the bank had not yet paid it out the

respondent. He maintained the prayer for the interim order.

The brief background to the instant application is as follows: The respondent successfully sued the applicant for 15 breach of contract vide HCCS No. 721 of 2021. He obtained a decree against the applicant for USD 900,000 and USD 450 general plus interest thereon at 20% pa and costs. In a bid to execute the decree, the respondent applied for garnishee orders against the Stanbic Bank. 20 UNRA and GTB Bank and obtained decree nisi from the High Court in respect of all three. The respondent thereafter obtained a garnishee order absolute in respect of Stanbic Bank and UNRA.

In the meantime, the applicant had applied to the High 25 Court for stay of execution. The High Court dismissed that application. The applicant then filed a Notice of Appeal in the Court of Appeal against the decision of the High Court in HCCS No.721 of 2021. It also filed a fresh application

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for stay of execution vide Court of Appeal Civil Appeal $\mathsf{S}$ No.100 of 2021. The Court of Appeal dismissed that application with costs. The applicant was dissatisfied and filed a Notice of Appeal in this Court, an application for stay and for interim stay of the execution of the decision of the High Court. I heard and granted the applicant a certificate 10 of urgency and heard this application today. By then, the garnishee order against GTB Bank had been made absolute by the High Court.

At the hearing, the applicant was represented by Mr. Isaac Ssali Mugerwa, assisted by Mr. Brian Kirima. The 15 respondent was represented by Mr. Ahmed Mukasa Kalule. They based their arguments on the respective affidavits summarized above and cited a number of authorities that I have assisted me in determining this application. I also note that learned counsel for the applicant at this stage 20 changed the prayer and urged court to issue an interim order to stop the payment of the monies from GTB Bank pending the hearing of the main application.

I have carefully perused the record and considered the submissions by both learned counsel. I have also read a $25$ number of authorities from this Court on interim orders particularly the ones cited by learned counsel for both parties. What runs through all the authorities is the fact that the law and the principles in this area are well settled.

The law governing applications for injunctions or stay of $\mathsf{S}$ execution is set out in Rule $6(2)$ (b) of the Rules of this Court which reads as follows:

> "6(2) Subject to sub-rule $(1)$ of this rule, the institution of an appeal shall not operate to suspend any sentence or stay execution but the Court may---

$a)$ ....

b) In any civil proceedings, where a Notice of Appeal has been lodged in accordance with Rule 77 of these Rules, order a stay of execution, or injunction or stay of proceedings as the Court may consider just."

In cases of urgency, this Court is empowered to issue interim orders as a stop gap measure to ensure that the substantive application is not rendered nugatory. This $20$ power is granted to Court by Rule $2(2)$ of the Rules of the Court in "order to achieve the ends of justice". In Hon. Ssekikuubo & Ors vs AG & Ors, SC Constitutional **Application No. 04 of 2014, this Court said:**

"Rule 2(2) of the Judicature Court Rules gives this Court very wide discretion to make such orders as may be necessary to achieve the ends of justice.

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# One of the ends of Justice is to preserve the right of appeal".

The principles followed by our courts for the grant of interim orders are set out in the case of Hwang Sung Industries Limited v Tajdin Hussein & Others, SC Civil Application No.19 of 2008, cited by learned counsel for $10$ the applicant, where Okello JSC, as he then was, said:

> "For an application for an interim stay, it suffices to show that a substantive application is pending and that there is a serious threat of execution before hearing the substantive application. It is not necessary to pre-empt the consideration of matters necessary in deciding whether or not to grant the substantive application for stay."

In Zubeda Mohammad & Anor vs Laila Kaka Wajja & Anor, SC Civil Reference No.07 of 2016, relied on by $20$ learned counsel for the respondent, this Court, after considering the earlier decisions including the ones cited herein, said:

"In summary, there are three conditions that an applicant must satisfy to justify the grant of an *interim order:*

1. A competent Notice of Appeal; 2. A substantive application;

$\mathsf{S}$ ## 3. A serious threat to execution."

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Regarding the first condition, I find that the applicant has shown by Annexture A to the affidavit of Mr. Zhang Jinpal that it has filed a Notice of Appeal in the Court of Appeal on the $14^{th}$ June, 2021. It states that the applicant is dissatisfied with the decision of the Court of Appeal given on the 10^th June, 2021 in Court of Appeal Civil Appeal No.100 of 2021 and intends to appeal against it to the Supreme Court.

The issue is whether it is a competent Notice of Appeal or not. Learned counsel for the respondent has submitted that 15 the Notice of Appeal is incompetent because no right of appeal exists to the Supreme Court from an interlocutory matter such as Court Civil Appeal No.100 of 2021 on which the Notice of Appeal is based. Therefore the appeal is incompetent and the substantive application has no leg to 20 stand on. Consequently, this application must fail for this reason alone. He relied on the decision of this Court in Zubeda Mohammad & Anor vs Laila Kaka Wajia & Anor. SC Civil Reference No.07 of 2016; Beatrice Kobusingye v Phiona Nyakana, SC Civil Appeal No.05 of 2004; and $25$ Uganda National Examinations Board v Mparo General Contractors Ltd, SC Civil Application No.19 of 2004; in support of his submissions.

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- In his response, learned counsel for the applicant opposed $\mathsf{S}$ the submissions by the respondent's counsel and insisted that the Notice of Appeal is competent because it is based on section $6$ (1) of the Judicature Act which allows such appeals. - I have considered their submissions carefully and read the $10$ authorities cited as well as the law relied on by the applicant's counsel. Section $6(1)$ of the Judicature Act reads as follows:

$(6(1)$ An appeal shall lie as of right to the Supreme Court where the Court of Appeal confirms, varies or reverses a judgment or order including an interlocutory order given by the High Court in exercise of its original jurisdiction and either confirmed, varied or reversed by the Court of Appeal"

This provision was interpreted by this Court in **Uganda** National **Examinations Board** $\mathbf{V}$ **Mparo** General **Contractors Ltd,** (supra) where the Court stated as follows:

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"According to this provisions there is automatic right of appeal from the Court of Appeal to this Court in civil matters decided by the High Court in exercise of its original jurisdiction provided the

Court of Appeal has considered and decided on merit an appeal to the Court from a decision of the High Court in exercise of its original jurisdiction. In the case of Attorney General v Shah (No.4) [1971] E. A 50, the East African Court of Appeal said, and we agree, that it has long been established that appellate jurisdiction springs only from statute

In the present case, the intended appeal does not arise from a decision of the Court of Appeal in which that Court considered and finally decided on merit a first appeal thereto. The decision of the Court of Appeal in striking out the Notice of Appeal.

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What the applicant is seeking to appeal against is not a decision of the Court of Appeal in exercise of its appellate jurisdiction but an incidental or interlocutory order made in respect of a an intended appeal which has not been lodged or heard and decided on merit.

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Striking out a Notice of Appeal is not a final **decision.**" (the underlining is provided for emphasis).

In the Court's view, this finding was sufficient to dispose of $\mathsf{S}$ the application. The application was dismissed with costs to the respondent.

In **Beatrice Kobusingye v Phiona Nyakana**, (supra) the appeal arose from an interlocutory ruling of the Court of Appeal rejecting an objection to the competence of two 10 grounds of appeal. Citing their decision in **Uganda** National Examinations **Board Mparo** General $\nabla$ **Contractors Ltd,** (supra) Court said emphatically that:

"... There is no right of appeal to this Court originating from interlocutory orders of the Court of Appeal which orders are incidental to the appeal but not resulting from the final determination of the appeal itself. Here the Court of Appeal has not determined the appeal yet. It follows that the Court of Appeal erred in giving the certificate to the appellant to lodge this appeal."

In that case, the Court found that the appeal was incompetent and struck it out.

Similarly, and on the basis of the foregoing authorities from 25 this Court, I agree with counsel for the respondent that the intended appeal that formed the basis of the Notice of Appeal does not arise from a decision of the Court of Appeal

- in which that Court considered and finally decided that $\overline{5}$ merit of the first appeal thereto. The decision was not made by the Court of Appeal in exercise of its appellate jurisdiction since the applicant applied afresh to that Court for a stay of execution vide Court of Appeal Civil **Application No. 100 of 2021.** This was after the High 10 Court had dismissed a similar application. I therefore find the Notice of Appeal incompetent. This finding disposes of the application. I will however, briefly deal with the other two conditions. - The second condition for the grant of an interim order is 15 the existence of a substantive application. In light of my earlier finding, this ground also fails as the substantive application has no leg to stand on since the Notice of Appeal is incompetent. In **Zubeda Mohammad & Anor vs** Laila Kaka Wajja & Anor, (supra) this Court faulted the 20 single Justice who had granted an interim stay of exception in the absence of a substantive application for stay of execution. Consequently, the Court allowed the reference and set aside the said interim order for that reason among - others. 25

The third condition is imminent threat of execution. Here it is common ground that the decree nisi in respect of GTB Bank was made absolute on the $18^{th}$ June, 2021. The process of execution as far as attachment of monies held by

the said bank for the applicant is therefore complete. The $5$ bank is liable to pay, when the order is made absolute. This Court cannot at this stage issue an order to stop the Bank from paying the monies to the respondent as prayed by learned counsel for the respondent. See. Joachimson v Swiss Bank Corporation [9121] 3KB 110 at p.131. The 10 only remedy for the applicant as rightly stated by counsel for the respondent is to apply to the High Court under Order 23 Rule 7 of the Civil Procedure Rules, to set aside the order, for convincing reasons, of course. The Rule reads: 15

## "7. Payment by or execution on the garnishee is a valid discharge.

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

In the case of **Gashumba Maniraguha v Sam Nkundiye**, SC. Civil Application No. 24 of 2015 relied on heavily by 25 counsel for the applicant, Court found that the applicant in that case had met the criteria for the grant of an interim order.

- $\mathsf{S}$ Most importantly, regarding the criteria of imminent threat of the execution, Court found that there was a permanent house on the suit land which was yet to be demolished. That is why Court ruled that the process of the execution was not yet complete and if the appeal succeeds, it would be difficult for the applicant to construct another 10 permanent house, resulting into a substantial loss. Consequently Court granted the application. The case of Gashumba Maniraguha v Sam Nkundiye is therefore distinguishable from the instant one. - In conclusion and for the foregoing reasons, I find that the 15 applicant has not met the conditions for the grant of an interim stay of execution. I am fully aware that Rule $2(2)$ of the Rules of this Court confers on the Court discretionary powers in the pursuit and fulfilment of the exercise of the substantive justice. I am also aware that this principle is $20$ now given greater force of law by the provisions of article 126 of the Constitution which obliges courts to, in an appropriate case, render substantive justice in preference to technicalities. - However, it is gainsaid that the exercise of that discretion $25$ can only arise where there is a competent matter before court for resolution. Where there is none, as is the case with the instant application, Court would be indulging in an abuse of the due process if it proceeds to exercise the

discretion. I accordingly dismiss the application with costs $\mathsf{S}$ to the respondent.

I so order.

Dated at Kampala this **22^nd** day of **June**, 2021.

M. S. ARACH-AMOKO JUSTICE OF THE SUPREME COURT.

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