[2024] UGCommC 352

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA [COMMERCIAL DIVISION] **MISCELLANEOUS APPLICATION NO. 0795 OF 2024** [ARISING FROM CIVIL APPEAL NO. 0120 OF 2023] [ARISING FROM CIVIL SUIT NO. 0415 OF 2014]

ASHIRAF KIRONDE::::::::::::::::::::::::::::::::::::

#### **VERSUS**

# BANK OF AFRICA UGANDA LIMITED:::::::::::::::::::::::::::::::::::: **BEFORE: HON. LADY JUSTICE ANNA B. MUGENYI**

#### **RULING**

This application was brought by notice of motion under section 98 of the Civil Procedure Act (CPA), Order 43 of the Civil Procedure Rules(CPR), and section 33 of the Judicature Act for orders that court stays the execution of the judgment and decree in civil suit no. 0415 of 2014 pending the final determination of the pending appeal, court stays the taxation of the bill of costs proceedings under taxation application no. 1565 of 2023 and costs of this application be provided for.

This application was supported by the affidavit of Ashiraf Kironde, the applicant and opposed by the affidavit in reply of Elisha Tayebwa, an Advocate working with M/s Ligomarc Advocates.

The facts giving rise to this case are that the applicant obtained a loan facility from the respondent amounting to Ugx 880,000,000/= (eight hundred and eighty million shillings) and the same was secured by mortgages over various properties of the applicant. Upon default by the applicant, the respondent foreclosed and sold some of the mortgaged properties. The respondent then filed civil suit no. 0415 of 2014 to recover the outstanding balancing of Ugx 1,208,214,548/= (One billion two hundred and eight million two hundred and fourteen thousand five hundred forty-eight shillings) and judgment was entered in favour of the respondent. The applicant being dissatisfied with the judgment filed civil appeal no. 0120 of 2023 in the Court of Appeal against the decision of the trial judge and later this application for stay of execution.

## **APPLICANT'S CASE**

The Applicant contends in his affidavit in support that, there is an imminent threat of execution since the respondent is threatening the applicant to pay and has filed for the taxation of the bill of costs. The applicant contends that if the stay is not granted, he will suffer substantial loss and his appeal will be rendered nugatory. The applicant further contends that his appeal has merits, is likely to succeed, and that this application has been made without undue delay.

In rejoinder, the applicant contended that he is willing to deposit security for costs in due performance of the decree however the respondent has retained some of his properties which are above the value of the security for costs that would be required. He contended that he will suffer substantial loss as his property is at risk of being disposed of and the respondent has started execution proceedings by filing their application for taxation. The applicant also contended that there has been no unreasonable delay.

## **RESPONDENT'S CASE**

The respondent contends that the applicant's application does not satisfy the grounds for the grant of stay of execution. He contended that the applicant has not demonstrated any readiness and willingness to deposit security for the due performance of the decree in civil suit no. 0415 of 2013 which is a condition for the grant of stay of execution. He further contended that there has not only been unexplainable and inexcusable delay by the applicant in filing this application, but the applicant will also not suffer any substantial loss if the application is not granted.

The respondent further contended that the respondent will be greatly prejudiced if this application is granted as there will be delay and uncertainty as to when the respondent will enjoy the fruit of the judgment.

#### REPRESENTATION

The applicant was represented by M/s Bbaale & Partners Advocates and Legal Consultants whereas the respondent was represented by M/s Ligomarc Advocates.

#### **RULING**

I have read the pleadings of the parties in this matter. Timelines were given for the parties to file submissions and it was only the applicant who filed their submission on the 11^th of November 2024 which was outside the timeline given by this court.

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The main issue for consideration is whether the execution of the decree in civil suit no. 0415 of 2014 should be stayed pending the determination of the appeal.

The spirit behind courts granting a stay of execution pending an appeal was discussed in the case of Lawrence Musiitwa v Itobu Margret HCMA No.0160 of 2022 where it was held that:

"An Application for stay of execution pending an appeal is designed to preserve the subject matter in dispute so that the right of the appellant who is exercising his undoubted rights of appeal are safeguarded and the appeal if successful is not *rendered nugatory.*"

Order 43 rule $4(2)$ of the CPR provides that where an application is made for a stay of execution of an appealable decree before the expiration of the time allowed for appealing from the decree, the court which passed the decree may on sufficient cause being shown order the execution to be stayed.

Parties seeking a stay of execution pending appeal should be prepared to meet the conditions set in Order 43 rule 4(3) of the CPR which provides that:

"No order for stay of execution shall be made under sub rule $(1)$ or $(2)$ of this rule unless the court making it is satisfied-

(a) That substantial loss may result to the party applying for stay of execution unless the order is made;

(b) That the application has been made without unreasonable delay; and

(c) 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".

In the case of Ntege Mayambala v Christopher Mwanje HCMA 72/1991, it was held that all the conditions laid down by Order 43 rule 4 (3) of the Civil Procedure Rules must be fulfilled before execution can be stayed. The rationale for these conditions is to maintain the status quo and maintain that the purpose of the application is not to defeat justice by delaying tactics and to prove that the judgment debtor is serious with his application for stay of execution.

The above conditions for grant of stay of execution were expounded in the case of Hon Theodore Ssekikubo & others v Attorney General & others Constitutional Application No. 03 of 2014 and these include:

a) The Applicant must show that he lodged a Notice of Appeal

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- b) That substantial loss may result to the Applicant unless the stay of execution is granted - c) That the Application has been without unreasonable delay - d) The Applicant has given security for due performance of the decree or order as may be ultimately be binding upon them

In the case of **Kyambogo University v Prof. Isiah Omolo Ndiege, C. A. C. A No. 341 of 2013** Justice Kakuru observed that in an application for stay, the applicant must prove in addition to other grounds:

- a) That there is a serious and imminent threat of execution of the decree or order and - b) That refusal to grant the stay would inflict greater hardship than it would avoid

Having taken cognizance of the above principles, I will therefore apply the same in the determination of this application.

#### $\mathbf{i}$ . Whether there is a notice of appeal

The applicant attached a memorandum of appeal to his application marked as annexure " $A$ ".

I therefore find that the applicant has duly lodged an appeal in the Court of Appeal.

# ii. Whether the application has been made without unreasonable delay

Counsel for the applicant submitted that the respondent served the applicant with the taxation hearing notice on the 5^th day of April 2024 and the applicant filed this Application to stay the proceeding on the $8^th$ day of April 2024, which is a clear indication that it filed without unreasonable delay.

Applications for a stay of execution must be made without unreasonable delay and the reckoning of time to determine if a delay is unreasonable begins at the time the decree or order is sealed and becomes enforceable. (Formula Feeds Ltd v KCB **Bank Ltd HCMA No 1647 of 2022)**

In the instant case, the decree in the civil suit was issued on the 9^th of January 2023 and as stated by the applicant the taxation hearing notice was served on them on the $5^th$ of April 2024.

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After considering the time that they were served with the taxation hearing notice into account, this application was made without unnecessary delay.

#### Whether there is a serious or imminent threat of execution of the decree iii. if the application is not granted

Counsel for the applicant submitted that at the time of making this application, the respondent was in the process of executing the decree as he had on several occasions demanded the applicant to pay the judgment sum and has also initiated the taxation of the bill of costs.

In the case of Baguma Paul T/A Panache Associates v Eng. Karuma Kagyina **HCMA No.460 of 2020, Justice Musa Ssekana while citing the case of Orient Bank** Ltd v Zaabwe & Others HCMA No 19/2006 stated that:

"The general rule is that courts should not order a stay where there is no evidence" of any application for execution of the decree."

In the case of Formula Feeds Ltd v KCB Bank Ltd HCMA No. 1647 of 2022 Justice Stephen Mubiru stated that:

"An order of stay will issue only if there is actual or presently threatened execution." There must be a direct and immediate danger of execution of the decree. There should be unequivocal evidence showing that unconditional steps as to convey a gravity of purpose and imminent prospect of execution of the decree, have been taken *by the respondent. Steps that demonstrate a serious expression of an intent include;* extracting the decree, presenting and having a bill of costs taxed, applying for issuance of a warrant of execution, and issuing a notice to show cause why execution should not issue."

The applicant has not adduced any evidence to show that an application for execution of the decree has been made and that he has been served with a notice to show cause why execution should not ensue. I, therefore, find that there is no imminent threat of execution.

This ground therefore fails.

#### Whether substantial loss may result to the Applicant unless the stay of iv. execution is granted

Counsel for the applicant submitted that the respondent already sold three properties belonging to the applicant to which it allegedly recovered Ugx $405,000,000/=$ and

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has commenced the execution process of the decree by filing for the taxation of the bill of costs and faces the threat of losing the rest that are in the custody of the respondent if the application is not granted.

In the case of Tanzania Cotton Marketing Board v Coqecot Cotton Co. SA (1995-1998) 1 E. A 312 where Lubuva, J cited with approval the Indian case of Bansidhav-vs- Pribku Dayal AIR 41 1954 it was stated that:

"It is not enough to merely repeat words of the code and state that substantial loss will result; the kind of loss must be specified, details must be given and the conscience of the court must be satisfied that such loss will really ensue. The words substantial loss cannot mean the ordinary loss to which every judgment debtor is necessarily subjected when he loses his case and is deprived of his property in consequence. That is an element which must occur in every case and since the law expressly prohibits stay of execution as an ordinary rule, it is clear the words 'substantial loss' must mean something in addition to all different from that.''

Further, in the case of Formula Feeds Ltd v KCB Bank Ltd(supra), Justice Mubiru stated that:

"The loss ought to be of a nature which cannot be undone once inflicted. The court has to balance the interest of the applicant who is seeking to preserve the status quo pending the hearing of the appeal so that his or her appeal is not rendered nugatory and the interest of the respondent who is seeking to enjoy the fruits of his or her judgment."

The trial Judge went on to find that:

"For that reason, execution of a money decree is ordinarily not stayed since satisfaction of a money decree does not amount to substantial loss or irreparable injury to the applicant, where the respondent is not impecunious, as the remedy of restitution is available to the applicant in the event the appeal is allowed. The respondent has not been shown to be impecunious nor the fact that execution of the decree will have any irreversible effect. The applicants have failed to prove this requirement too, as far as recovery of the monetary award is concerned."

In the instant case, the decree issued by this court is to the effect that the applicant pays Ugx $705,301,666$ = which is the outstanding balance from the credit facilities. This is in essence a money decree and does not ordinarily amount to substantial loss. In case of any loss, it is one that can be atoned by an award of damages or restitution. The respondent has also not been demonstrated to be impecuations.

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I therefore find that the applicant will not suffer any substantial loss and if any, it is one that can be compensated by an award of restitution or damages.

This ground therefore fails.

Whether security has been given by the applicant for the due $\mathbf{v}$ . performance of the decree or order as may ultimately be binding upon him or her.

Counsel for the applicant submitted that the titles from which the applicant would have generated the security for costs are still in the custody of the respondent from when they issued him the loan. Counsel further submitted that the court has the discretion to waive this prerequisite so as not to deny the applicant his right to appeal and that the applicant would have been more than willing to furnish the security for costs if he had any other way of providing the same.

Depositing security for due performance was addressed in the case of **Kisaalu** Joseph & 10 others v Nakintu May & Anor Miscellaneous Application No. 105 of **2020 where** Justice Victoria Nakintu stated that:

"The condition requiring an applicant to deposit security for due performance" is established under Order 43 Rule 4 (3(c). Security for due performance has been interpreted to mean the entire decretal sum and it is intended to protect the judgment creditor in the event that the appeal is unsuccessful. Courts though have been reluctant to order security for due performance of the decree. Rather Courts have been keen to order security for costs because the requirement and insistence on a practice that mandates security for the entire decretal amount is likely to stifle appeals."

Due to the complications associated with security for due performance as discussed above, courts have resorted to making orders for the award of security of costs.

The purpose of paying security for costs was discussed in the case of Nkonge Rugadyain Shem Mpanga Mukasa & Anor v Kizza Clessy Barya, Miscellaneous Application No. 479 of 2021 by the Hon. Lady Justice Alexandra who stated that:

"The payment of security for costs is intended to operate as a shield against the filing of frivolous and vexatious appeals which may never succeed yet have an effect in *escalating trial costs.*"

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Security for costs or due performance of the decree therefore operates as an insurance cover that is meant to indemnify the judgment debtor in the event the appeal fails without recourse to vigorous processes of recovering such costs. (Wandera Micheal v Baguma Samalie Miscellaneous Application No. 36 of 2021).

The applicant in this case admits that he has not deposited security for costs and seeks for this court to waive security for costs because some of his certificates of title are still in possession of the respondent. As noted above, security for costs is meant to operate as an insurance cover to indemnify the debtor in the event the appeal fails. A court can only dispense with the requirement of depositing security for costs in very exceptional circumstances and the reason raised by the applicant does not fall in those circumstances.

This ground therefore fails.

#### vi. That refusal to grant the stay would inflict greater hardship than it would avoid

Save for the averments that the applicant will suffer irreparable damage if the decree is executed against them, the applicant has not adduced any evidence to this effect or to show that execution will cause greater difficulty/hardship or disruptions beyond which every judgment debtor is subjected to when they lose a case.

As such, I therefore find that the applicant has also failed to demonstrate to this court that the refusal to grant the stay would inflict greater hardship than it would avoid. The balance of convenience therefore lies in favour of the respondent.

I therefore find that the applicant has failed to satisfy the majority of the essential requirements for the grant of an order of stay of execution pending appeal. Consequently, this application fails and is hereby dismissed with costs to the respondent.

HON. LADY JUSTICE ANNA B. MUGENYI DATED...................................