[2024] UGCA 93

## THE REPUBLIC OF UGANDA

## IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

# CryIL APPLICATION NO. L27L OF 20.23

(Arising from Ciuil Appeal No. 1553 of 2023 and High Court Ciuil Sttit No.42 of2O2O)

#### 1. HARUNA ENTERPRTSES (UILTD

2. HARUNA SENTONGO ::::::::::::::::::::::::::::::::::: :: APPLICANTS

#### \/ERSUS

#### 1. DTAMOND TRUST BANK (Ul LTD

2. DIAMOND TRUST BANK IXENYA| LTD:::::::::::: RESPTONDENTS

# BEFORE: HON JUSTICE OSCAR KIHII(A, JA

(Sitting as a single Justice)

#### RULING OF COURT

This application was brought under Rule 2(2), 43 and 44 of the Judicature (Court of Appeal Rules) Directions seeking for orders that;

(a)A temporary injunction restraining the Respondents, their agents, representatives, nominees, assignees and/or successors in title from selling, transferring, alienating, evicting, dealing with and or in any way interfering with the Applicant's interest and possession of the properties comprised

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in Block 12 Plots 538, 826 and 898 at Mengo until the termination of the appeal.

(b)Costs for this application be provided for.

The application is supported by the affidavit of SENTONGO HARUNA sworn on the l"t of December 2023. The grounds upon which this application is premised are laid out in the Notice of Motion and the a-ffidavit in support and are briefly that;

- 1. The Applicant is the registered proprietor of the properties comprised in Block 12 Plots 538,826 & 898 at Mengo which is developed with a market. - 2. On l7tn Januar5r 2O2O, the Applicants filed seeking, among others, cancellation of the Security Realization Agreement between the Applicants and the Respondents dated 2"d November 2019 which was fraudulently executed. - 3. On 3Oth March 2023 when Civil Suit No. 42 of 2O2O came up for hearing, the Respondents requested for an adjournment to file their trial bundle and the learned Judge issued timelines for filing witness statements, trial bundles and a joint scheduling memorandum. - 4. However, on 18th Aprll 2023, the Applicants applied for leave to amend their plaint and the sarne was granted. - 5. On 21"t June 2O23, the Applicants filed their amended plaint and on 27rh November 2023, the Respondents filed an application seeking for further and better particulars.

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- 6. On 29th November 2023, the suit came up for hearing before the learned trial Judge who dismissed it with costs under Order 17 Rule 4 of the Civil Procedure Rules for failure to file within time. - 7. The failure to fiIe within the timelines was caused by the grant of an order for leave to amend the plaint and the subsequent pleadings. - 8. The Respondents equally did not file their trial bundle as directed by court. - 9. The Applicants filed a Notice of Appeal and a letter requesting for proceedings. - 10. The appeal is meritous and has a likelihood of success. - 11. There is a serious threat as the Respondents have sent brokers to the suit land claiming the property as available for sale after the dismissa,l of Civil Suit No. 42 of 2O2O.

The Respondents hled an aIlidavit in reply deponed by EMEJEIT MBABAZI sworn on the l1th of November 2023 opposing the application on the grounds that;

- 1. The dismissa-l of Civil Suit No. 42 of 2O2O was pursuant to Order 17 Rule 4 of the Civil Procedure Rules and the sale can only be carried out pursuant to the mortgage. - 2. As per the Mortgage Regulations 2012, the Applicants must deposit 3Oo/o of the forced sa-le value in order to stop the intended sa-le of the property. - 3. The 3Oo/o of the outstanding loan sum is 2,960,664,913.5 for DTB Uganda and USD 1,984,225.2 for DTB Kenya.

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- 4. The Applicants are bound by the Security Realization Agreement which placed the Applicants in indebtedness to the Respondents at Shs. 9,868,883,0451= to DTB Uganda and USD 6,6L4,O84 to DTB Kenya. - 5. The Applicants cannot approbate and reprobate and thus have no va-lid appeal.

# Representation

At the hearing of this application, Mr. Derrick Bazekuketta appeared for the Applicant, with the Applicant in attendance, while Mr. Stephen Zirnula appeared for the respondent. Both parties filed written submissions and the same were adopted as their legal arguments.

Mr. Zimula raised preliminary points of law at the hearing of this application and in the written submissions, which I find pertinent to address first.

# Prelimlnary points of law.

Mr. Zim:ula submitted that this application is incompently before this court as the same ought to have been first filed at the High Court under Rule 42(1) of the Judicature Court of Appeal Rules Directions sI 13-10.

In addition, the Respondent's counsel submitted that the order rn H. C. C. S No.42 of 2O2O is anegative order that is not capable of being stayed. Counsel submitted that the rule against issuing a stay order in respect of a negative order cannot be circumvented merely by

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d'/

terming the order sought as an 'injunction'. Counsel relied on the decision in Kare Distribution Ltd and Karegeya Geoffrey Vs NCBA Bank Civil Application No. 1OO ol 2o.23 in which an application for an order of stay of execution was dismissed for reasons that the order the Applicant sought to stay was a negative order.

In reply to the preliminary points of law, Mr. Bazekuketta submitted that in an application for a temporary injunction, it is not mandatory for the Applicant to first file the Application at the High Court. He relied on the decision in Kisawuzi Vs DFCU Bank Ltd Civil Application No. OO64 of 2OL6 I2OL6[ UGCA 7 for the proposition that an application for a temporaqr injunction can be filed at the Court of Appeal without being filed at the High Court hrst. Mr. Bazakuketta argued that the application before tl:ris court is one seeking for a temporary injunctive order and the same is validly before this court.

With regard to the second preliminary point of law, Mr. Bazekuketta submitted that this application is for a temporary injunction and not an order of stay of execution of a negative order. He argued that the Respondent appears to confuse an application for stay of execution with an application for a temporary injunction. An injunction order requires a party to refrain or to do a particular act.

# Consideration of preliminary points of law

The lirst preliminary point of law is in regard to the competence of this application. Rule 42 of the rules of this Court provides as follows:

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# n42. Order of hean'lng appllcatlons.

(1) Wheneuer an application mag be made either in the court or in the High Court it shall be made first in the High Court.

(2) Notwithstanding sub ntle (1) of this rule, in ciutl or criminal matter, the court maA, on application or of its oun motion, giue leaue to appeal and grant a consequential extension of time for doing ang as the justice of the case requires, or entertain an application under rule 6 (2) (b) of these Rules, in order to safeguard the ight of appeal, notwithstanding the fact that no application for that pufpose has first been made to the High Court."

Rule 42 above requires a party to first file such an application in the High Court first, where both this Court and the High Court have concurrent jurisdiction. Mr. Bazekuketta referred me to the decision in Ganafa Peter Kisawuzi Vs DFCU Bank Ltd Civil Application No. O064 of 2OL6 a2OL6l UGCA 7, which I Iind relevant to this preliminary point of law. In that case, this court (fu1l bench) held as follows;

"Regarding the temporary injunction, O.41 (1) of the Ciuil Procedure Rules (CPR) prouides tluzt:

"Where in ang suit it is proued bg alfidauit or otherwise-

(q that ang propertg in dlspute ln a sult ls ln danger of belng utasted, domaged, or alienated bg ang patig to

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tY

the sult, or urongfitllg sold ln executlon of a decreel or

dlspose of hts or her property utith a vleut to defraud his or her credltors, the court mag bg order grant a temporary lnJunctlon to restraln such act, or make such other order for the purpose of staging and preaentlng the utastlng, damaglng, allenation, sale, removal or dlsposltlon of the propettg as the court thtnks fit untll the dlsposol of the suit or untll fufther orders".

The CPR is applicable to the High Court and the subordinate courts thereto. From the aboue prouision, one can applg for a temporary injunction onlg when there is a pending suit before the court u.thich has not been disposed of, In the present application, the Applicant could not applg for a temporary injunction in the High Court because the suit was disposed of uhen judgment u.tas deliuered. There is no reEtirement for an application for ^a temporary injunction to first be filed in the High Court.

In the instant case, High Court Civil Suit No. 42 of 2O2O which was frled by the Applicant was dismissed. It therefore would not be possible for the Applicant to file an application for a temporary injunction in the High Court in the absence of a pending suit. Thus, the only option available to the Applicant was to file the application to this court. I therefore hnd that this application for a temporary

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injunction is properly before this court. The first preliminary point of law is thus over ruled.

The Respondent's counsel argues that this application is seeking a stay of a negative order of dismissal which is not capable of being stayed. From the wording of the orders being sought for by the Applicart, it is clear that this application seeks an order for ^a tempora-ry injunction against the Respondents restraining them from interfering with the Applicant's interest and possession of the properties comprised in Block 12 Plots 538, 826 and 898 at Mengo until the termination of the appeal. The Respondent relied on the decision in Kare Distribution Ltd and Karegeya Geoffrey Vs NCBA Bank Civil Application No. 1OO of 2023. The facts pertaining to that case are, however, distinguishable from the facts in this case. In that case, the Applicant sought an injunction order against the Respondent on property that was not subject of the appeal.

In this case, the Applicants seek an injunction not against the decision of the court but enforcement of the mortgage pending determination of Civil Appeal No. 1553 of 2023. The second preliminary objection is thus over ruled.

# Consideration of the application

I have carefully considered the affidavits and the submissions of both parties. I have also perused the authorities provided by counsel for which I am grateful.

> Page 8 of 15 Cy The jurisdiction of this court to grant a temporary injunction stems from Rule 6 (2) (bl of the Rules of this Court which provides as follows;

6. Suspension of sentence and stag of execution.

(2) Subject to subrule (1) of this ntle, the instihttion of an appeal shall not operate to suspend ang sentence or to stay exeantion, but the court may-

(a) .

(b) in any ciuil proceedings, rahere a notice of appeal has been lodged in accordance uith rule 76 of these Rules, order a stay of execution, an injunction, or a stag of proceedings on such terms as the court may think just.

Thus, a temporary injunction is intended to maintain the status quo of things pending the determination by court of some serious cause pending before it. In Robett Kanruma Vs Hotel Internatlonal Supreme Coutt Chil Appeat JVo.8 of 7990, Wambuzi CJ, as he then was, held:-

" . It is generally accepted that for a temporary injunction lo issue, the court must be satisfi"ed:-

;. That the Applicant has a pima facie case with a probability o/success.

ii. That the Applicant might otherwise suffer irreparable damage which would not be adequatelg compensated for in damages.

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iii. If the court is in doubt, on the aboue tuto points, then tLrc court uill decide the application on a balance of conuenience. In other words, whether the inconueniences which are likelg to issue from uithholding the injunction would be greater than those tuhich are likelg to arise from granting it".

Thus, the granting of a temporar5r injunction is an exercise of judicial discretion and the purpose of granting it is to preserve the matters in the status quo until the question to be investigated in the main suit is hnally disposed of. The conditions for the grant of a tempora-ry injunction are;

- 1. Firstly, that, the applicant must show a prima facie case with a probability of success. - 2. Secondly, such injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury which would not adequately be compensated by an award of damages. - 3. Thirdly if the Court is in doubt, it would decide an application on the balance of convenience.

An order for a Temporary Injunction is granted so as to prevent the ends of justice from being defeated.

## L. Prlma facie case with likelihood of success

The Supreme Court in the case of Gashumba Maniraguha vs Sam Nkudlye Civil Application No. 24 of 2015, in effect held that the likelihood of success, is the most important consideration in an application for stay of execution. Therefore, it is incumbent upon the

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Applicant to avail evidence, or material to the court in order for it to establish whether or not the Applicant has a prima facie case on appeal.

I have carefully read the submissions by counsel for the Applicant and the Respondent, the affidavits on record and the law applicable. On the issue of likelihood of success, the applicant stated in paragraph 17 of the afhdavit in support of the application that the appeal is meritous, raises serious questions for determination pf this court and has a high likelihood of success. The Applicant attached the Memorandum of Appeal marked annexure J.

The Applicant contends in paragraphs 4 to 15 of the affidavit in support that on 3Oth March 2023, Civil Suit No. 42 of 2O2O came up for hearing and timelines were issued for hling witness statements, trial bundles and a joint scheduling memorandum. On 14th April, the Applicant filed his witness statement and on 18th applied for leave to amend the plaint, which leave was granted. Following the grant, the Applicant hled an amended plaint on 21"t June 2023 and in November, the Respondents filed an application seeking for further and better particulars. On 29th November 2023, the trial Judge dismissed the suit under Order 1 Rule 4 of the Civil Procedure Rules.

The Court of Appeal of Kenya described an arguable appeal in Stanley Kang'ethe Kinyanjui v Tony Ketter & 5 Others [2013] ^e KLR in the following terms:

"uii). An arguable appeal is not one uhich must necessarily succeed, but one which ought to be argued fullg before the court;

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one which is not friuolous. uiii). In considering an application broughl under Rule 5 (2) (b) the court must not make definitiue or final findings of either fact or lana at that stage as doing so may embarrass the ultimate heaing of the main appeal."

The decision in Stanley Kang'ethe Kinyanjui v Tony Ketter & 5 Others (supraf is of persuasive value and I would adopt the same reasoning in this case. It is not the duty of this court to pre-empt considerations of matters for the full bench in determining the appeal, but to determine whether the appeal is frivolous. In the instant case, the applicant not only attached the Memorandum of Appeal but also laid out the questions for this court to determine in the appeal.

It is therefore my considered view that the applicant has established that he has a prima facie case pending determination before this court.

## 2. Irreparable damage

The second consideration is whether the applicant will suffer lnepanable damage or that the appeal ulll be rendered nugatory tf a stag is not granted.

In this regard, the Applicant stated in paragraphs 18 to 22 of his a-ffrdavit in support of the application that he acquired the suit land in 2Ol4 and it took him over 5 years to develop the same with a market he named 'Nakayiza'after his mother. He stated that he has a sentimental attachment on the property that cannot be compensated for in damages if the property is sold. The property in

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the instant case, the subject of the appeal before this court, is a commercial building with a market whose rent proceeds can be ascertained.

However, I must note that the applicant's suit at the trial court was never heard on its merits having been dismissed under Order 17 Rule 4 of the Civil Procedure Rules for failure to hle the trial bundle within the stipulated timelines. The Applicant has stated in his a-fhdavit that the failure was occasioned by the grant of the application for leave to amend his plaint and the Respondent's application for further and better particulars. The Applicant would, in my view, suffer irreparable damage if he be condemned unheard contrary to Articles 28(1) and 44 lcl of the Constitution of the Republic of Uganda under which the right to a fair hearing is non-derogable.

In my understanding, the applicant has to show that the damage bound to be suffered is such that it cannot be undone. It is therefore my considered view that the Applicant will suffer irreparable damage if this application is not granted.

## 3. Balance of Convenience

Ba-lance of convenience lies more on the one who will suffer more if the respondent is not restrained in the activities complained of in the suit. Therefore, in arriving at the proper decision whether the balance of convenience favors the applicant or not, court must weigh the loss or risk at exposure for the applicant in the event the order is denied and the damage which could be suffered if it is not granted. See Jayndrakumar Devechand Devani Vs. Haridas Vallabhdas

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CY

## Bhadresa & Anor, Civil Appeal No. 21 of L97t (Court of Appea-l of East Africa)

In essence, court should examine the prejudice and the injury both parties are likely to suffer if the stay is granted or denied.

In this case the applicant is in possession of the suit property, a commercial building with various tenants carrying out business and the sale of the property will be to the detriment of the applicant. The applicant prayed for a temporar5r injunction maintaining the status quo until the determination of the appeal pending before this court. I believe the balance of convenience favors the applicant who is in possession and stands to be prejudiced if the suit property is sold.

It is therefore my considered view that the applicant in this case has made out a case for the issuance of a temporary injunction restraining the respondent from the sa-le or interference with the suit property until the applicant's appeal vide Civil Appeal No. 1553 of 2023 is disposed of by this court. The issue of Regulation 13( 1 ) of the Mortgage Regulations as argued by Mr. Zirmtla, does not arise in this case where there is no adjournment of a sa-le being sought. The subject matter is the suit property, of which the facts surrounding the mortgage have not been determined by the trial court on the merits.

In the result, I allow this application and make the following orders;

1. An order of a temporary injunction is hereby issued restraining the respondents, their agents, representatives, nominees,

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assignees and/or successors in title from selling, transferring, alienating, evicting, dealing with and or in any way interfering with the Applicant's interest and possession of the properties comprised in Block 12 Plots 538, 826 and 898 at Mengo until the termination of Civil Appeal No. 1553 of 2023.

2. Costs shall abide the outcome of the appeal.

Dated this $\ldots$ day of $\ldots$ $\frac{1}{2024}$

OSCAR JOHN KIHIKA **JUSTICE OF APPEA**