[2025] UGCommC 117

# **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL COURT DIVISION) MISCELLANEOUS APPLICATION NO. 074 OF 2025** 5 **(ARISING OUT OF CIVIL SUIT NO. 0990 OF 2020)**

**ROKO CONSTRUCTION LIMITED::::::::::::::::::::::::::::::::: APPLICANT**

**VERSUS**

**PRAMUKH STEEL LIMITED:::::::::::::::::::::::::::::::::::::: RESPONDENT**

#### **Before: Hon. Lady Justice Dr. Ginamia Melody Ngwatu**

#### **RULING**

- The applicant filed this application by notice of motion under Article 126 of the 1995 15 Constitution of the Republic of Uganda, as amended, section 98 of the Civil Procedure Act, Section 33 of the Judicature Act, Order 52 Rule 1 and 3 of the Civil Procedure Rules S. I. 7l-1, as amended. The application seeks orders that: a stay of execution of the judgment decree and orders of the High Court in *Civil Suit No. 990/2020* be granted pending determination of the applicant's appeal*, Civil Appeal No. 1473 of 2023*, to the Court of Appeal; and that costs of the 20 application be provided for. - The background to this application is that the plaintiff/respondent herein brought a claim against the defendant vide *Civil Suit No. 990/2020 Pramukh Steel Limited vs Roko Construction Limited* for recovery of USD 399,156,050, interest, general damages and costs of the suit. The 25 plaintiff/respondent herein had supplied the defendant/applicant herein with various steel products worth USD 450,827.850 and the defendant/applicant only paid USD 51,671.800 leaving a balance of USD 399,156.050. Court found in favour of the plaintiff/respondent for the amount of USD 399,156.050 as the outstanding amount due; interest of 10% from the date of filing the suit until payment in full; and costs of the suit; hence this application for stay of - 30 execution.

The grounds of the application were stated in the affidavit of Mark Koehler, the Director of the applicant and briefly are that:


- 1) Trial Judge passed judgment on 3rd October 2024 against the applicant and issued an order for the payment of USD 399,156,959, interest of 10% and costs vide Civil Suit No. 990/2020. - 2) Being aggrieved by the said decision, the applicant lodged a notice of appeal vide COA—00-CV-CA-1123-2024 on 14th 5 October 2024 in the trial court with the intention of appealing against the decision of the trial court. - 3) The applicant has high chances of succeeding in the appeal due to the following grounds: i). the learned trial Judge erred in law and fact when she failed to properly evaluate the evidence on record thus arriving at an erroneous decision. - 10 ii). the learned trial Judge erred in law and fact when she relied on the report of an auditor selected by the respondent to pass judgment without room for crossexamination by the applicant thereby reaching an erroneous decision.

iii). the learned trial Judge erred in law and fact when she held that the issue before court was determined by the audit thereby disregarding other issues raised in the 15 plaint thereby reaching an erroneous decision.

> iv). the learned trial Judge erred in law when she solely relied on the report of an auditor to pass judgment.

- 4) There is imminent danger that if the respondent is not stopped from executing the 20 aforementioned orders, it will cause the applicant to suffer substantial financial loss, inconvenience and cause an injustice to them which cannot be atoned by damages. - 5) the applicant will suffer irreparable damage because it shall be condemned to payment of a colossal sum of money arising from an illegality as it was not given a chance to a fair hearing. - 25 6) If the court does not stay the execution of the orders, the appeal shall be rendered nugatory. - 7) The applicant's appeal has a high likelihood of success. - 8) The applicant is ready to pay security for due performance if so ordered by the court. - 9) It is in the interest of justice that this application is granted pending the determination of 30 the preferred appeal.

The respondent opposed the application on the grounds contained in the affidavit in reply of Senghani Bhavesg Virji, the Sales and Marketing Manager of the respondent, wherein he briefly stated that:

- 35 1) The application is based on frivolous and vexatious grounds and brought in bad faith. - 2) The applicant always frustrated the progress of *Civil Suit No. 990/2020* by refusing to comply with the directions of the court. - 3) Court adjourned several times to allow the applicant to comply with its directives.

- 4) The court directed the parties to meet and reconcile the amount due to the respondent. The applicant asked for the respondent's local purchase orders, which were availed but it refused to pay the sums due. - 5) During the trial of *Civil Suit No. 990/2020*, court directed that the reconciliation of 5 accounts be conducted by an auditor duly appointed by the High Court Registrar; and M/s Patan & Associates Certified Public Accountant was appointed by court as a joint auditor to reconcile the parties' documents and make a report to the court. - 6) Despite being aware of the appointment, the applicant refused to comply and also pay the auditor's fees which prompted the respondent to apply to court for an order that it pays 10 the auditor's costs to enable the conclusion of the process. - 7) The applicant was directed by court to refund the fees paid by the respondent to the auditor, which it has neglected/refused to do. - 8) Court delivered its ruling following the conclusion of the audit and reconciliation exercise, as required by law. - 9) The applicant lodged its notice of appeal on the 15th 15 day of October 2024 and it was served to the responded out of time. - 10) The intended appeal has no likelihood of success due to the fact that it is based on frivolous and vexatious grounds; and the same is intended to delay the whole execution process. - 20 11) The applicant's grounds of appeal do not disclose any triable issues on appeal since it states that the auditor was appointed by the respondent whereas it was appointed by court; and the applicant does not dispute receiving the goods or the amount due but only disputes procedures of court. - 12) The applicant will not suffer any substantial financial loss, inconvenience and injustice. - 25 13) The applicant was granted a fair hearing during the trial of Civil Suit No. 990 of 2020, which was heard to its logical conclusion and the applicant will not suffer irreparable damage. - 14) The applicant has not paid security for due performance.

#### 30 **Representation at the hearing**

The applicants were represented by Mr. Ainebyoona Nelson of Newmark Advocates; while the respondent was represented by Ms. Hezlee Kihembo of Arcadia Advocates. The parties were granted leave to file written submissions which are on the Court record.

#### 35 **Issue for determination**

The main issue for determination is whether this application raises sufficient grounds for an order of stay of execution? If it does, whether security for costs should be paid by the applicants; and whether the parties have remedies available to them?

#### 40 **Submissions**

At the hearing of this application, counsel for all parties were given schedules to file their respective written submissions and they all complied. This court shall consider the submissions alongside the respective pleadings and authorities cited in the determination of this application.

### 5 *Determination of court*

The submissions of the parties have been taken into consideration; as well as the relevant legal authorities cited. The submissions will, however, not be reproduced here. This application is resolved as follows:

10 The rationale for a grant of stay of execution pending an appeal was laid out in the case of *Lawrence Musiitwa vs Itobu Margareet HCMA No. 0160/2020* where court held that an application for stay of execution pending an appeal aims at preserving the subject matter 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.

As to whether the applicant herein ought to be granted a stay of execution, is dependent on whether they have raised sufficient grounds to warrant a grant. This issue is resolved below:

### *Issue 1: whether this application raises sufficient grounds for an order of stay of execution?*

20 Stay of execution is provided for under Order 22 rule 26 of the Civil Procedure Rules SI 71-1 which provides thus:

*"Where a suit is pending in any court against the holder of a decree of the court in the name of the person against whom the decree was passed, the court may, on such terms as to security or otherwise, as it thinks fit, stay execution of the decree* 25 *until the pending suit has been decided."*

Order 22 rule 26 of the Civil Procedure Rules, therefore, confirms that court has the discretion to grant or deny a stay of execution. Order 22 rule 26 of the Civil Procedure Rules makes it clear that there should be a pending suit in any court in the name of the person against whom the 30 decree was passed. It is upon the existence of a pending suit that the court may grant a stay, and on the terms that it deems fit. In this instance, the applicant herein attached a notice of appeal endorsed by the Registrar of the High Court on 15th October 2024, to their application. This confirms that there is a pending suit.

- 35 Order 43 rule 4 (3) of the Civil Procedure Rules SI.71 further provides for the conditions that ought to be satisfied before a stay of execution is granted and they include that: - 1. substantial loss may result to the party applying for stay of execution unless the order is made; - 2. the application has been made without unreasonable delay;

3. 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.

These considerations were cited in the *case of Hon Theodore Ssekikubo and Ors vs the Attorney* 5 *General and Ors Constitutional Application No. 03 of 2014* and expanded on by the Court of Appeal in *Kyambogo University vs Prof. Isaiah Omolo Ndiege, Civil Application No. 341 of 2013* to include the following grounds:

- 1. there is serious or imminent threat of execution of the decree or order and if the application is not granted, the appeal would be rendered nugatory; - 10 2. the appeal is not frivolous and has a likelihood of success; - 3. refusal to grant the stay would inflict more hardship than it would avoid.

In light of the grounds raised by the applicant for a grant of stay of execution, it is found as follows:

#### *1. The filing of a notice of appeal*

Order 43 rule 4 (3) of the Civil Procedure Rules, presupposes that an application of this nature must be made after a notice of appeal has been filed in court. In this particular instance, there is a notice of appeal attached to the application herein as "Annexture B" to the affidavit in support of 20 the application. There is no doubt that there is a pending appeal

#### *2. The appeal has a likelihood of success*

It is a requirement that the said appeal should have a likelihood of success. The appeal should 25 raise triable issues with a likelihood of success and this can be deduced from grounds of appeal as raised in the memorandum of appeal. Justice Stephen Mubiru in the case of *Formula Feeds Limited & 3 Others vs KCB Bank Limited Miscellaneous Application No. 1647 of 2022* Page 7, stated that:

*"The court must be satisfied that the prospects of the appeal succeeding are not* 30 *remote but that there is a realistic chance of succeeding. More is required to be established than that there is a mere possibility of success. That the case is arguable on appeal or that the case cannot be categorised as hopeless…"*

In the *Formula Feeds Limited & 3 Others vs KCB Bank Limited* case, Justice Mubiru found that 35 the applicants had not provided court with the memorandum of appeal of the pending appeal to the Supreme Court; and it was, therefore, not possible for an assessment to be conducted as to whether the applicants had an arguable case on appeal.

In the application before this court, the applicant did not furnish court with a copy of their 40 memorandum of appeal to enable court establish whether their appeal had a likelihood of success

or if it is one that is frivolous. There was no proof attached to the application to demonstrate that the applicant applied for a copy of the certified record of proceedings. Other than stating that there are serious issues that need to be properly determined by the Court of Appeal and that the appeal has a likelihood of success, there is no mention as to whether there was a delay in 5 accessing the record of proceedings, thereby affecting the drafting and filing of a memorandum of appeal. Without a memorandum of appeal, this court is unable to establish the likelihood of success of the appeal; or whether the Court of Appeal would reasonably come to a different conclusion from the trial court.

It is the finding of this court that this requirement has not been satisfied.

## *3. Substantial loss may result to the party applying for stay of execution unless the order is made*

On this ground, it is necessary that the applicant demonstrates to court that substantial loss would be rendered to them if the stay of execution is not granted and execution occurs before the appeal 15 is heard.

In *Tropical Commodities Suppliers Ltd and Ors vs International Credit Bank Ltd (In Liquidation) (2004) 2 EA 331,* court stated that substantial loss does not represent any particular amount or size for cannot be quantified by any particular mathematical formulae. It refers to any loss, great or small that is of real worth or value as distinguished from loss without a value or

20 that which is merely nominal.

It is not sufficient to show only show that there is a possibility of a loss being occasioned on the applicant; but rather it must be demonstrated that the harm caused to the applicant would not only be substantial, but also irreparable.

The Counsel for the applicant stated that the "the applicant may suffer irreparable harm". The use of the word "may" signifies that the harm to be suffered is not definite but a mere speculation on its possibility. On the other hand, there is a judgment creditor/respondent who was awarded USD 399,156.050 being the outstanding amount owed by the applicant herein to the respondent 30 for the supply of steel products. It is the view of this court that the satisfying of a debt owed by the applicant to the respondent would not amount to substantial loss.

I find that the applicant has not satisfied this ground.

#### *4. The application has been made without unreasonable delay*

An application for stay of execution ought to be made within a reasonable time. The reasonableness or unreasonableness of the delay in filing such an application would be dependent on the circumstances pertaining to each case. In *Kabarema Adonia vs Natukunda* 40 *Marion Miscellaneous Application No. 0264/2021*, at page 7, Hon. Justice Joyce Kavuma,

having examined the record of *HCT-05-CV-CA-0043-2016*, found that the application had been brought without reasonable delay. The basis of this finding was that the decision of the court was made on 16th August 2021 and the application was lodged before the same court on 8th October 2021.

In the instant case, a decision was rendered by Hon. Cornelia Sabiiti Kakooza *Civil Suit No. 0990/2020* on 3 rd October 2024. The applicants subsequently appealed against the decision and a Notice of Appeal was filed on 15th October 2024. The respondent commenced execution proceedings on 13th January 2025, as a result of which the applicants filed this application for stay of execution on 17th 10 January 2025. I do not find any unreasonable delay in the filing this application by the applicants.

# *5. 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*

15 In this particular application, no security was provided by the applicant for the due performance of the decree, as may be ultimately binding upon them. The applicant, however, in their application stated that they were willing to pay security for due performance of the decree if required by court.

# 20 *6. There is serious or imminent threat of execution of the decree or order and if the application is not granted, the appeal would be rendered nugatory*

Under this ground, there must be a direct and immediate danger of execution of the decree. The determination of whether or not an appeal will be rendered nugatory if a stay of execution is not granted is dependent on whether, if a stay is not granted and execution is permitted to proceed,

25 the effect will be reversible. If the effect is irreversible, whether the award of damages can reasonably compensate the aggrieved party; or it is in public interest to grant a stay of execution. Here, it may be necessary for the *status quo* to be preserved pending appeal in a bid to ensure that the rights involved in the appeal may not be lost or reduced by reason of an intervening execution of the judgment.

In this particular instance, there is no doubt that the process towards execution of the decree had commenced with the application filed by the plaintiff/respondent herein on 13th January 2025, per annexture "C" attached to the affidavit in support of the application. It should, however, be borne in mind that satisfaction of a money decree does not ordinarily pose the danger of 35 rendering a pending appeal nugatory, where the respondent is not impecunious, as the remedy of restitution is available to the applicant in the event the appeal is allowed. The applicant herein has not shown the respondent to be impecunious. The presumption then is that payment made to the respondent in execution of the decree will be reversible in the event of the applicant succeeding on appeal.

Court has a duty to balance between the interests of the respondent who was the successful litigant in *Civil Suit No. 0990/2020* and wishes to execute the decree; and the interests of the applicant who was the unsuccessful litigant and wishes to pursue an appeal. In consideration of the submissions made by both counsel for the applicant and the respondent in this application,

- 5 and the law pertaining to applications for stay of execution pending an appeal, this court is not convinced that the applicant has proved sufficient grounds to warrant a grant of a stay of execution. The applicant has not demonstrated that there is a serious threat of irreparable harm if execution succeeds or that the respondent is impecunious; neither has the applicant demonstrated that the appeal has a reasonable chance of success. - 10

The applicant has failed to satisfy the essential considerations for a grant of an order of stay of execution pending appeal. This application fails and is hereby dismissed with costs to the respondent.

15 I so order.

*Dr. Ginamia Melody Ngwatu*

20 *Ag. Judge 4 th June 2025*

*Ruling delivered via ECCMIS*