[2015] UGCC 96

#### APPLICANTS THE REPUBLIC OF UGANDA IN THE- CONSTITUTIONAL COURT OF UGANDA AT KAMPALA' CONSTITUTIONAL APPLICATION No.. 0010 OF 2015 •x 1. GAME CONCEPTS LTD 2. BETWAYS LIMITED '

VS

RESPONDENT THE ATTORNEY GENERAL

#### CORAM: HON. MR. JUSTICE ELDAD MWANGUSYA, JA

#### RULING OF THECOURT

## Introduction

This is an application for an interim order to issue against the respondent, the National Lotteries Board, any other government agencies, servants, employees, assignees, or others claiming or deriving authority from the state from interfering with the applicants' rights to carry on the lawful business of gaming and sports betting in Uganda whether by closing any of the applicants' branches, prosecuting the applicants or any of their servants, agents or employees for conducting the lawful business of gaming and pool betting, or in any other way interfering with their businesses until the resolution of the applicants' constitutional petition. The application also sought the costs of the application.

The application was brought by way of Notice of Motion under Section 98 ofthe Civil Procedure Act, cap 71, and Order 51 Rules ¹ and ³ ofthe Civil Procedure Rules S.1.71-1.

It was supported by the affidavit of one Emmy Makuma Namulunyi, the Managing Director ofthe 2nd applicant, dated 15th April 2015.

#### **)** Background

The background to this application is that the applicants who are already engaged in the lawful business of promoting gaming and pool betting in Uganda applied to the National Lotteries Board for renewal of their licenses for the year 2015. The Board has declined to renew their licenses prompting them to file a constitutional petition challenging the Government's refusal to grant the licenses. The contention is that it is inconsistent with and in contravention— of Article 40(2) of the Constitution of the Republic of Uganda which protects the fundamental rights of all persons in Uganda to carry on any lawful occupation, trade or business. Following the Constitutional petition, an application for a temporary injunction and subsequently this interim application were filed.

#### Grounds ofthe application

The grounds upon which the application is premised are stated briefly in the Notice of Motion and laid out in the affidavit in support. It is averred among other things, that:

\*' The 2nd applicant is a limited liability company duly incorporated in Uganda operating the business of a gaming and pool betting promoter,

- The applicants have filed jointly a constitutional petition against the respondent seeking protection of, inter alia, the applicants' constitutional rights to carry on a lawful business in Uganda, - The applicants have also filed an application for a temporary injunction against the respondent and his agents the National Lotteries Board, servants, employees, assignees or anyone else claiming or deriving authority from them from interfering with the applicants' rights to carry on the lawful business of gaming and sports betting and from prosecuting the applicant for conducting the said lawful business of gaming and po^l betting in Uganda, - The 2nd applicant has further been threatened with closure of its business operations at a meeting with officials of the National Lotteries Board despite the pendency of the constitutional petition and temporary injunction applications, - Unless the interim order is granted, the substantive application for temporary injunction and the main petition shall be rendered nugatory as the applicants constitutional rights shall continue to be under threat,

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® It is in the interest of justice and equity that the orders sought herein be granted.

#### Reply

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The respondent neither filed an affidavit in reply nor appeared at the hearing ofthe application despite proper°service.

# **³** Representation

The applicants were represented by Mr. Ebert Byenkya.

## Case for the applicants

Counsel for the applicants stated that the gist of the application was to prevent the respondent or any of the Government agents from closing down the business operations ofthe applicants until the resolution ofthe substantive application for injunction or the constitutional petition.

He referred to the affidavit in support ofthe application for the grounds upon which the application was premised. He observed that there was filed a substantial application for a temporary injunction and a constitutional petition. He noted that the petition brought under Article 137 (3) challenged the constitutionality of certain provisions of the gaming and betting control and taxation acts. He gave an example of Section 2 which purports to make it an offense to carry out the business of gaming and betting without a license. He stated that the gist of the petitioner's argument would be that if the business is lawful, it is not

; constitutional to attempt to criminalize it merely because of the regulatory requirements. He added that they would make an argument that criminal acts must be such and can never be lawful.

He further submitted that the respondent was continuously making it impossible for them to conduct business which affected the right to conduct lawful business and also affected the right to treat people equally under the law.

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Counsel relied on the case of **Horizon Coaches v Mbarara Municipal** Council & 2 others Constitutional Application **No.** 07 of **2014** where the court observed that in order to determine that the requirements for grant of an interim order of injunction have been met, court has to look at the face, of the petition and the application. The requirements are that the petition is not frivolous or vexatious and prima facie it has likelihood of success, that a party stands to suffer irreparable loss should the application not be granted and in case of doubt, the matter can be resolved on a balance of convenience.

On whether the petition is frivolous or vexatious, counsel submitted that the petition challenges the constitutionality of a series of subsidiary legislative provisions under the Gaming and Betting Control Act and on the face of it, it is not frivolous or vexatious. It raises a matter for resolution by the Constitutional Court and in the mean time the rights of the applicants should be protected.

**5 LO L5 >0** On irreparable loss, counsel submitted that the applicants stood to suffer loss as it was shown in the affidavits in support of the application and the petition. The 1st applicant averred that he has been operating his business for the last 3 years he has been paying for his licenses and submitted his last application for renewal several months ago paid all .the fees but he has not been given a renewal of the license. He stated that instead they have imposed very difficult conditions for the renewal of the license among which they have imposed the license on each branch that he operate. Having been operating 38 branches of one million shillings, that fee has been increased by a thousand percent from the previous requirements, and thus, where he needed three point eight million now he requires thirty eight million shillings. The security requirements for the past years was two hundred million and this year it is five hundred..million. His argument was that if someone made it so difficult for you to conduct business, you would go out of business, which would lead to irreparable loss.

Counsel pointed out that the facts of the 2nd applicant were a bit dramatic. He stated that the applicant applied for the license, duly paid up, was granted permission to operate. However, what happened next was that the same authority that granted him permission went to the business place arrested everyone claiming that they were conducting criminal activity. He argued that they were arrested and the persons

**>c** **5** arrested were only released on bond and the danger of prosecution is very eminent ifthe injunction is not granted.

He argued that there was need to examine the Betting law to avoid cases where it seemed to facilitate the elimination of the small players so that it becomes for a few people. He stated that the status quo was that the applicants are currently conducting business since they received letters authorizing them to conduct business but the challenge is that they have now declined to renew the licenses, which to counsel is unconstitutional.

He also argued that the balance of convenience was heavily weighted in favor of applicants because the regulator has nothing to lose given that they already have their payments for license fees. But the applicant has everything to lose.

He thus prayed that court allows this application so that the outcome-of the main applicatiorrand the petition shall not become nugatory?

## Court's consideration of the application

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**3** Section 98 of the Civil Procedure Act, cap 71, gives this court inherent powers to make such orders as may be necessary for the ends ofjustice or to prevent abuse ofthe process ofthe court.

This application seeks an interim order for an injunction pending the hearing of the substantial application and the main petition. Counsel for the applicant relied heavily on the petition and the affidavits in support

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**5** of the application and the petition to argue that failure to giant this application would render the outcome of the petition and application a nugatory.

Incidentally, despite proof of service of all .the pleadings on the respondent, the respondent did not file a reply. The law in regard to affidavits that are not opposed is established. It is settled law that where certain facts are sworn to in an affidavit, the burden to deny them is on the other party. Failure to do that, they are presumed to have been accepted. See H. G. Gandesha and another v G. J. Lutaya SCCA No. 14 of 1989. This court holds no different view in this case.

**5 3** In handling applications of this nature, the law that guides court is equally well-settled. It is not for court to begin deciding whether the petition has merit or not at this point as that is a reserve of the constitutional court. In the case of Horizon Coaches v Mbarara Municipal Council (supra) which was cited to this court by counsel for the respondent, court observed:

> "It is now trite law that a party seeking an interim order of injunction as this has to satisfy court the main application and the petition are not frivolous or vexatious and that prima facie they have a likelihood of success. That a party stands to suffer irreparable loss should the application not be granted and in case of doubt the

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matter can be resolved on a balance of convenience. See Humphrey Nzeyi vs Bank of Uganda and the Attorney General (Constitutional Application No. ¹ of 2013) Per Remmy Kasule JA" (sic)

The question of the likelihood of the success of the petition has increasingly become a contentious question. The argument is that you cannot establish this fact by a mere look at the pleadings before you without being biased or biasing the proper court that shall hear the main application and/or the petition. In American Cyanamid v Ethicon Ltd (1975) AC 396, Lord Diplock observed:

> a "Your Lordships should, in my view, take this opportunity of declaring that there is no such rule. The use of such expressions as 'a probability' , 'a prima facie case', or 'a strong prima facie case' in the context of the exercise of a discretionary power to grant an interlocutory injunction leads to a confusion as to the object sought to be achieved by this form of temporary relief. The court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried. (However) it is no part of the court'^s function at this stage to try to resolve conflicts of evidence on affidavit as to facts on which claims of either party may ultimately depend nor to decide difficult

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questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at trial."

The conditions for grant of a temporary injunction would appear to be most persuasively summed up in Halsbury's Laws of England, Vol. ¹¹ (2009), 5th Edition, para. 385, quoting as follows:

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"On an application for an interlocutory injunction the court must be satisfied that there is a serious question to be tried. The material available to court at the hearing of the application must disclose that the claimant has real prospects for succeeding in his claim for a permanent injunction at the trial. The former requirement that the claimant should establish a strong prima facie case for a permanent injunction before the court would grant an interim injunction has been removed."

**25** In the instant case, counsel delved in the merits ofthe petition in a bid to show court that the petition and the main application indeed are not frivolous. I will only observe that the questions posed by the petition deserve the attention ofthe constitutional court to determine whether the law regulating Sports Betting is constitutional or not, whatever the outcome. **(²⁰**

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**5 10 15** Regarding the argument that the applicants stand to suffer irreparable loss should their businesses be closed before the petition is heard, is in my view, a meritorious argument seeing that the actions of the respondent if not checked, may cause these business people to lose, so much, yet the respondent will suffer no damage ifthe businesses remain open. It is trite that when handling such applications, the business interests of the applicant should be given due consideration and bear in mind where the greater risk of suffering injustice lies if the remedy sought was to be withheld by'court. In the case of American Cynamid v Ethicon [1975] AC 396, the House of Lords said this about interim injunctions:

> **"Our** business is **justice and not** convenience. **We can and must** disregard **fanciful claims by either party. Subject to that, we must contemplate the possibility that either party may succeed and must do our best to ensure that nothing occurs pending the trial which will prejudice his rights..."**

Guided by the above decisions and the fact that the grant of interim orders is a matter of court's discretion, this application is granted. I am only unable to grant the orders relating to prosecution because they are couched in such general terms that I cannot tell what offences the applicants are being investigated for. In my view, if they are ever taken to court for any specific offence, the issue of the propriety ofthe charges

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**5** is better addressed in the court in which the charge will be laid. The order for maintaining the status quo will be issued in the following terms:

> *Qi* Lottery Board, and any other government servants and employees, assignees or others or deriving authority from the State from An interim order does issue against the respondent, the National agencies, claiming closing or in any way interfering with the applicant's rights to carry on the lawful business of gaming and sports betting in Uganda till disposal of Constitutional Application No. 09 of 2015 for a temporary injunction pending before this court."

The costs of the application will abide the outcome of the main application.

**'0** Dated at Kampala this 2015 day of

sya IdadMwan **1/**

Justice of Appeal

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