[2003] UGCommC 129

# THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA

## **(COMMERCIAL DIVISION)**

## **MISCELLANEOUS APPLICATION NO. 614 OF 2003**

# **(Arising from High Court Miscellaneous Application No. 22 of 2003)**

## **TAHAR FOURATI HOTELS LTD... APPLICANT**

### **VERSUS**

### **NILE HOTEL (INT.) LTD RESPONDENT Before: The Hon. Mr. Justice E. S. Lugayizi**

### **RULING**

This ruling is in respect of an application for the following orders:

1. That execution under High Court Miscellaneous Application No. 22 of 2003 be stayed pending the disposal of the applicant's appeal against the order of Court dated 6/10/2003.

2. That the costs ofthe application be provided for.

An affidavit Mr. Gordon Sentiba swore on 7/10/2003 accompanied the application.

In an affidavit he swore on 22/10/2003 Mr. Matthias Sekatawa opposed the application. Court heard the application on 22/10/2003. However, before Court goes into the substance of the application it is wise to understand its background, which is as follows.

In the mid 1990s the applicant and the respondent entered into a management contract in respect of the respondent's hotel located in Kampala, at Plots 16-20 Nile Avenue (i.e. the suit premises). The said contract was supposed to be for a specific period. However, before the said period came to an end the respondent rescinded the contract. The applicant took the rescission as a breach of contract entitling it to compensation. Therefore, it lodged a caveat on the certificate of title for the suit premises. Following that event, the respondent filed High Court Miscellaneous Application No. 22 of 2003 and, among other things, sought Court's order vacating the said caveat. After hearing the application Court vacated the caveat and awarded the respondent a sum ofshillings 5m/= as compensation for the inconvenience it suffered when the caveat stood on its certificate of title for ³ months. Those orders aggrieved the applicant, which obtained leave to appeal against them. It, then, filed a Notice of Appeal dated 6/10/2003 and the application that is the subject of this ruling. Roughly, that is the background to the application.

At the time of hearing the application Mr. Denis Owor represented the applicant and Mr. Kanyerezi represented the respondent.

In essence, Mr. Owor submitted that the applicant needs the orders sought because it intends to appeal against Court's ruling dated 6/10/2003; and to that end it has already filed a Notice of Appeal. He further pointed out

**7**

that the appeal was likely to succeed and therefore, if Court did not grant the orders sought the appeal would be rendered nugatory. He cited several authorities including **Wilson** & **Church, 1879 12 Ch. Div. 454; and DFCU Bank Ltd v Dr. A. P. Lusejjere, Court of Appeal Civil Application No. 29 of 2003** in support of his position and called upon Court to grant the application.

Mr. K'anyerezi opposed the application mainly on three grounds. Firstly, he submitted that the respondent did not apply for execution because the order of Court dated 6/10/2003 is self-executing in the sense that it instantly vacated the caveat. For that reason, the execution process was completed a long time ago. It is irreversible; and it cannot be stayed now. Secondly, Mr. Kanyerezi submitted that the applicant was manipulating the process of the law by continuing to seek though the application that is the subject of this ruling, to protect *"a money claim"* by means of an illegal caveat on the respondent's certificate of title. He pointed out that the money claim the applicant has against the respondent rightly falls under High Court Civil Suit No. 628 of 2003 which the applicant, at last, filed on 16/10/2003. Thirdly, regarding Court's order directing the applicant to pay the respondent a sum of shillings 5m/=, Mr. Kanyerezi submitted that the applicant failed to show that if it paid the paltry sum mentioned above now, and its appeal later succeeded it would suffer irreparable injury. In the light of the foregoing, Mr. Kanyerezi called upon Court to dismiss the application with costs.

The Court of Appeal decision in **DFCU Bank Ltd v Dr. A. P. Lusejjere (supra)** laid down a few general principles this Court must follow in dealing with an application for stay of execution pending the disposal of an appeal in the Court of Appeal. That decision emphasises that before granting or refusing to grant a slay of execution in a case of this nature, Court should not pre-occupy itself with whether or not, the appeal will succeed. Instead, it should direct its mind to only the following matters:

1. Whether substantial loss may result to the applicant if the stay is not granted.

2. Whether the application was made without unreasonable delay;

3. Whether the applicant has given security for costs.

The Court of Appeal further observed that "... once the above three conditions are fulfilled... then the order for stay of execution ought to be granted, regardless whether the appeal will fail or succeed,"

It is pertinent to point out that the above three guidelines come from Order 39 rule 4(3) of the CPR. The important question to answer, therefore, is whether the applicant satisfied the requirements of the law embodied in the above 3 guidelines? Court will go through each one of the above guidelines in the light of the evidence on record with a view to answering the question posed.

With regard to the first guideline (i.e. whether substantial loss may result to the applicant if the stay is not granted) under Mr. Gordon Sentiba's affidavit the applicant showed that the respondent is on the verge of privatising its hotel business, which it runs on the suit premises. The full import of that assertion is that if Court does not grant a stay of execution now and later the intended appeal succeeds the applicant will suffer substantial loss. For it will be unable to enforce the orders of the Court of Appeal because there will be nothing in the hands of the respondent to satisfy such orders with since the respondent is presently in the process of privatising (or selling) its business interest on the suit premises.

The respondent was of the opinion that the applicant will not suffer substantial loss if Court does not grant the required stay of execution.

After carefully considering all, Court finds the applicant's line of argument unconvincing. It is presumptuous and speculative. It presupposes or assumes that after privatising its business interest on the suit premises the respondent will remain impecunious and it will have, absolutely, no interest in the suit premises. However, there is no evidence on record to show that will be the case. It is common knowledge that there are many ways in which privatisation may take place. For example, it may take the form of a complete sale ofthe whole of one's interest or a partial sale thereof, etc. The applicant did not show which type of privatisation the respondent is presently engaged in. Of course, in the absence of such evidence on record Court cannot speculate or be made to act on assumptions. In the circumstances, Court must find that the applicant failed to prove that if Court does not grant the stay of execution and later the intended appeal succeeds the applicant would suffer substantial loss.

With regard to the second guideline *(i.e. whether the application was made without unreasonable delay)* Court has this to say. Court's ruling, which is the subject of the intended appeal is dated 6/10/2003. The applicant filed a Notice of Appeal in respect of that ruling on 6/10/2003. It, then, filed the application that is the subject of this ruling on 7/10/2003. From the above chronology of events it is very clear that the applicant acted expeditiously and cannot be faulted on account of time in filing the application that is the subject of this ruling. In the circumstances, Court must find that the application was made without unreasonable delay.

With regard to the third guideline *(i.e. whether the applicant has given security for costs)* the truth of the matter is that it has not done so. However, during the hearing of the application the applicant showed willingness to deposit some money in Court as some form of security. In the circumstances, Court thinks that it is reasonable to say that if need arose the applicant would be willing to give security for costs.

All in all. the foregoing boils down to this. Out of the above ³ guidelines the applicant has satisfied Court in respect of only 2 ofthem. However, in Court's opinion those 2 guidelines are not the decisive factor in

determining whether Court should grant the application. Indeed, the first guideline is by far the weightiest ofthem all. but since the applicant failed to satisfy Court that it had met the requirements of the law in that guideline, it means that the application must fail.

Be that as it may, even if the applicant had succeeded in proving all the requirements of the law in the ³ guidelines above, the application would not have succeeded. Still it would have failed. In **Lawrence Musiitwa Kyazze v Eunice Busingye, Civil Appeal No. 18 of 1990,** although the Supreme Court approved the use of Order 39 rule 4(3) ofthe CPR in such application, it pointed out that where the application is frivolous, etc, Court should not grant it. In **Mugenyi v NIC Supreme Court Civil Appeal No. 13 of 1984** the Chief Justice (Wambuzi (J) as he then was) had this to say, " **an order for stay of execution must be intended to serve a purpose..."** Obviously, that says everything about the application seeking the order. It must have a purpose and a legitimate one for that matter.

When all is said and done, Court think that the application that is the subject of this ruling is not only frivolous, but also it is an abuse of the process of the law. In its ruling dated 6/10/2003 when Court vacated the caveat on the suit premises, it took opportunity to point out that from the beginning when these matters arose, the only viable redress the applicant had was to file a civil suit against the respondent for breach of contract. Interestingly, the applicant picked up the cue and filed such a claim against the respondent under **HCCS** No. 628 of 2003 on 16/10/2003. Indeed, Court has had the benefit of reading the contents of that claim. It has found that it is simply "a **money claim"** from the beginning to the end. In Court's opinion, therefore, HCCS No. 628 of 2003 is tacit admission on the part of the applicant that the application that is the subject of this ruling is not only *"hot air",* but also it is an abuse of the process of the law. From all appearances, the applicant only filed it as a gimmick to enable it to buy time to do other things. The good thing is that we were not born yesterday. We can easily make a distinction between gimmick and reality or pranks and serious stuff.

All in all, Court must dismiss the application that is the subject of this ruling with costs; and Court hereby orders so.

Finally, Court wishes to make this observation. It applied Order 39 rule 4(3) of the CPR, in the instant case, very reluctantly. It did so only because the decisions ofthe Supreme Court and the Court of Appeal bind it. Otherwise, it sincerely believes that Order 39 rule 4(3) of the CPR does not apply to the situation at hand. In Court's opinion, that Order applies only in situations where the applicant before the High Court is seeking to stay execution of a lower court's order pending the disposal of an appeal lying in the High Court. The heading of Order 39 of the CPR that reads as follows, **"APPEALS TO THE HIGH COURT",** and the contents of the Order confirm Court's position above. Interestingly, the decision of the Supreme Court in **Lawrence Musiitwa Kyazze (supra)** also agrees with Court in the above respect. However, after doing so, it appears to have turned round and legalised the application of Order 39 rule 4(3) of the CPR in an application like the one that is the subject of this ruling. With greatest respect, Court disagrees with the Supreme Court in that area of its ruling. Order 39 rule 4(3) of the CPR either applies to the situation at hand or it does not. Indeed, if it does not (as the Supreme Court correctly found in the first part of Lawrence **Musiitwa** Kyazze **supra)** then its fate is sealed; and there are no two ways about it.

In view of the above, therefore, the important question to answer is this. What is the correct way of bringing before the High Court an application to stay execution of its own decree pending the disposal of an appeal against such decree in the Court of Appeal? The answer to that question is as follows. The applicant should bring such application to the High Court by way of Notice of Motion under Order 48 rule ¹ of the CPR and Court's inherent powers in section 98 of the CPA (formerly section ¹⁰¹ of the CPA). Ultimately, it would be the applicant's duty to satisfy Court that he has good cause to warrant the grant ofstay of execution.

All in all, it is very clear that there is a gap in the Civil Procedure Rules in the area of stay of execution of a High Court decree pending the disposal of an appeal against such decree in the Court of Appeal. However, that gap is not cumbersome to fill, for it does not require Parliament to enact

legislation to fdl it. The Rules Committee that is charged with the responsibility of making rules governing the disposal of civil cases and matters under the CPR is the right body to attend to the above situation; and the sooner it does so the better.

By copy of this judgment the Honourable the Chief Justice is notified of the above gap in the law.

**07** E. S. LugayiA 7/11/2000 *\J*

Read before: At 12.15p.m.

Mr. Denis Owor for the applicant

Mr. Matthias Sekatawa for the respondent

Mr. Sewanyana c/clerk

*I I u* /E. ^Edgawzm 7/11/2003 (J \