[2023] UGCommC 225

### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA

### [COMMERCIAL DIVISION]

# **MISCELLENEOUS APPLICATION NO. 1349 OF 2021** (ARISING OUT OF MISCELLENEOUS APPLICATION NO. 1348 OF 2021)

# (ARISING OUT OF CIVIL SUIT NO. 283 OF 2016)

## **UGANDA TELECOM LIMITED (IN ADMINISTRATION):::::APPLICANT VERSUS**

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ANNE KANSIIME:::::::::::::::::::::::::::::::::::

### **BEFORE: HON. LADY JUSTICE ANNA B. MUGENYI RULING**

This application is brought by way of Chamber Summons under Section 33 of the Judicature Act Cap 13, Section 98 of the Civil Procedure Act Cap 71, Order 22 Rules 23 (1) & 89 (1) of the Civil Procedure Rules S. I 71-1, and Sections 164 (2) (ii) of the Insolvency Act 2011 for the orders:

- 1. An order for stay of execution of the decree in suit No. 283 of 2016 be issued pending determination of the Applicant's application before this Court seeking for declaration that the Respondent is bound by the Administration Deed and thus barred by law from commencing and continuing execution proceedings or other legal process or levy distress against the Applicant or its property while in Administration. - 2. Costs of the Application be provided for.

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The Application is supported by the affidavit of Pross Kembabazi, Ag. Chief Legal Counsel/Ag. Company Secretary of the Applicant. The Respondent relied on the affidavit in reply deponed to by Moses Muziki, an Advocate from M/S Kirunda & Wasige Advocates, the Respondent's advocates.

### Grounds of the application.

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> The grounds upon which the application is brought are laid down in the affidavit in support of the application, and are briefly that the Respondent has applied for execution of a decree in Civil Suit No. 283 of 2016 by attachment and sale of movable property and that a Notice to show Cause why warrant of execution should not issue against the Applicant was issued on 13^th October 2021, requiring the Applicant to attend Court on 19^th October 2021 at 9.00 am. The Applicant contends that there is a serious and imminent threat of execution of the decree in Civil Suit No. 283 of 2016 against the Applicant and yet the High Court granted the Applicant an Interim Protective Order on 28^th April 2017, under the provisions of the Insolvency Act effectively putting the Applicant under Provisional Administration.

That on 10^th May 2017, at the Applicant's Creditor's meeting, the Official Receiver was appointed Administrator and the Creditors allowed placing the Applicant in Administration. That the Administration Deed which was executed between the Applicant and Respondent on 22^nd May 2017 was varied by the High Court, and the Administration period was extended. That the Respondent's claim is among those that arose before the Applicant was placed in Administration, and therefore that the Respondent is barred by law from commencing and continuing execution proceedings or other legal process or levy distress against the Applicant or its property while in administration.

That the Respondent has recourse under Regula tion 172 0f the Insorvency Regurations 2013 to submit a claim in writing to the Appricant,s Administrator, who has the authority to examine the Respondent,s proof of debt and either accept or reject it' Further that the Respondent's apprication for sare of the Appricant,s movable property is premature. That if this order is not granted, it wourd inflict hardship on the Appricant, and that the Administrator would be required to render unlawfur preferentiar treatment to settle the Respondent against other creditors, contrary to the statutory priority of debts under the Insolvency Act 20 I 1.

That if not granted' the application seeking that the Respondent is bound by the Administration Deed sha, be rendered nugatory; and that it is in the interest of justice that an order for stay of execution be granted pending the determination of the application before this Court.

In the affidavit in repry to the apprication, the Respondent avers that this Application does not meet the requirements for the grant of an order of stay of execution because the Applicant has not appeared against or appried for reave to appear out of time, the judgement in civir Suit No. 2g3 0f 2016. That this application is premised on Misceilaneous Apprication No. l34g of 2,2rwhich is barred by the operation of the doctrine of r?es judicata in respect of which this court is functus oficio. Further, that the proceedings against the Respondent in HCCS No' 293 0f 2016 was permitted by this court because of discretion under the Insolvency Act.

The Respondent further avers that the Respondent has not provided any security for due performance of the decree as required by law and that the Respondent is guilty ofinordinate delay and that this dilatory conduct.

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#### **REPRESENTATION**

The Applicant was represented by the Legal Department of the Applicant while the Respondent was represented by M/s Kirunda & Wasige Advocates.

#### **SUBMISSIONS**

### **Applicant's submissions**

Counsel for the Applicant cited the case of Lawrence Musiitwa Kyazze V Eunice Busingye SCCA No. 18 of 1990 and Hon. Theodore Ssekikubo & Others V The Attorney General & Others Constitutional Application No. 03 of 2014 wherein the principles for the grant of an application for stay of execution were laid out; and he submitted that the same grounds are applicable in this case. In relation to the pending substantive application No. 1348 of 2021 pending before the Court, Counsel submitted that paragraph 15 of the affidavit in support of the Notice of Motion states that the Respondent is bound by the Administration Deed, and is therefore bound by commencing or continuing execution proceedings against the Applicant or its property. He further adds that the issue was not specifically addressed by the Trial Judge in the Civil Suit, therefore this application is not res judicata and functus officio as the Respondent claims.

Counsel further submitted that the Applicant will suffer substantial loss if a stay is not granted because the Applicant has been in Administration since April 2017 to deal with situations when there is need to protect the value of a business from enforcement action by unpaid creditors like the Respondent. That the Applicant will lose its property if the orders sought for are not granted, thereby suffering a substantial loss; which he argued would not only frustrate the administration process but also defeat the goal of the administration. That the Applicant is still in administration. He added that the Application was made without undue delay as

the Court issued the Notice to show cause why a warrant of execution should not issue against the Applicant on 13^th October 2021 and that this Application was filed on the 18^th day of October 2021.

Counsel added that there is a serious and imminent threat of execution of the decree in Civil Suit No. 283 of 2016 which will render the Application No. 1348 of 2021 nugatory. He added that security for due performance of the decree is not a condition precedent for granting stay of execution and he cited case law in support. Further, Counsel submitted that Section 164 (2) (b) (ii) of the Insolvency Act bars the Respondent from commencing execution proceedings or other legal process or levying distress against the Applicant or its property. Lastly, Counsel submitted that the execution proceedings are premature as the Respondent has not taken the recourse and steps required under Regulation 172 (1) of the Insolvency Regulations.

#### **Respondent's submissions**

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In reply, Counsel for the Respondent submitted that there must be a pending appeal for stay of execution to be granted, and that the case of Equity Bank Uganda Limited V Nicholas Were HCMA No. 604 of 2013 cited by the Applicant states the same. Counsel added that the Applicant chose not to appeal against the decision of the Judge in Civil Suit No. 283 of 2016 and therefore that this application should fail on this ground alone. He also submitted that appeals are not commenced by applications unless stated by the statute. That in this case, the Applicant has not shown how its substantive application is an appeal.

Counsel further submitted that the substantive application, upon which this application arises is barred by Section 7 of the Civil Procedure Act, which prohibits claims that are res judicata as the Applicant is trying to re-try a

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preliminary point of law that it raised before the Court, and was rejected in Court's ruling. The Court then heard the parties on the merits and came to a decision that the Respondent was not barred by the Insolvency Act, and that the Court had the discretion to give leave to allow proceedings. He added that after Court issued its ruling, it is only the Court of Appeal that can overturn that decision.

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Counsel further cited the case of General Industries (U) Limited V NPART CACA No. 51 of 2007 where the two principles of claim preclusion and issue preclusion were stated. The Respondent therefore concludes that the two principles exist in the substantive application, making this application untenable in law.

Counsel added that this Court is functus officio on the issue raised in the substantive application and therefore the present application cannot stand. That whereas at this stage the Court is not required to go into the merits of the substantive appeal, it is required to gauge whether or not the grounds of the appeal are in fact arguable. That in this case, the ground in the substantive application is barred by statute on grounds of judicata, and on that ground the Court is functus officio once it passed its decision in the Civil Suit. No application can be founded on an action which is barred by law.

In relation to the statutory requirement for security for due performance, Counsel submitted that the discretion lies on Court and not the Applicant seeking to move Court to exercise such discretion with justification. That having received judgment in her favour, the Respondent should be allowed to enjoy the fruits of her judgement; and that execution is the final stage of the case and it was granted by Court. That the Applicant has not moved Court to waive the requirement and also not provided a basis upon which the discretion should be exercised.

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Further, that the mode of execution envisaged by the Respondent is permitted under the law and occas.lons no miscarriage of justice to the Applicant, and that there is no appear against the decision of the court and therefore this application for stay of execution is inherentry fatal and cannot be sustained in law. They prayed that the application be dismissed.

#### RULING

^Ihave carefully looked at the pleadings and considered the submissions of the parties in this matter and hold as follows.

und'er order 43 Rute a \$) of rhe civit procedure Rures an order of stay of execution wirl onry be made if the court is satisfied that substantial loss may result to the party applying for stay of execution if the order is not made, or that the application has been made without unreasonable deray, and that security has been given by the appricant for the due performance of the decree or order as may ultimately be binding upon him or her.

However' since no appear has been preferred and the time within which an appear should have been lodged has erapsed, order 22 Rute 23 (1) of the Civir procedure Rules cited, by the Appricant is more appricable to the current case.

Under this order, stay of execution may be granted if sufficient cause is shown, especially since an application for execution has been made to this court, and the Applicant seeks an order in reration to execution. order 22 Rure 23(/) provides:

"The court to which a decree has been sent for execution sha,, upon sufiicient cause being shown, stay the execution of the decree for a reasonabre time to enabre the iudgment debtor to apply to the court by which the decree was passed, or to any court having appeilate jurisdiction in respect of the decree or the execution of the decree' for an order to stay the execution, or for any other order rerating to the

decree or execution which might have been made by the court offirst instance, or appellate court if execution has been issued by the appeilate court or if application for execution has been made to it."

In this case, in proving that there is sufficient cause, the Applicant claims that they have a pending substantive application and that the Applicant wiil suffer substantial loss if the stay is not granted. It is true that the Applicant has a pending substantive application, Miscellaneous Application No. l34g of 202r and not an appeal, in this court. An apprication for execution by way of sale of movable property belonging to the Applicant was made, and it is also true that the Applicant has not appealed against the Trial Judge's decision in civil Suit No. 2g3 of 2016, which the Respondent now seeks to execute. whirst it may be true that if the order for execution is made the Applicant is likely to lose irs property, the Applicant did not prefer any appear against the decision in civil Suit N0. 2g3 of2016 and I do not find reason to stay execution. This is because this is something which they ought to have foreseen the moment the decision was made in civil Suit No. 2g3 of ²⁰¹⁶and instead chose to sit on their rights.

In addition, the reason why the Applicant made this application is to allow court determine their Application seeking for a declaration that the Respondent is bound by the Administration Deed and thus barred by law from commencing and continuing execution proceedings or other regar process against the Applicant. I am more inclined to agree with counsel for the Respondent that the said Application is an attempt by the Applicant to have court to re-try an issue that they already raised ^apreliminary objection upon which Court already pronounced itself. I have looked at the ruling of the leamed Trial Judge on page I g of Annexure A to the Affidavit in Reply to this Application, the Judge held as follows;

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"I have taken into consideration your submissions and I have looked at the relevant roles at the law at length, I have not seen any concrete provision which bars this Court from proceeding to hear this claim by the Plaintiff."

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The Judge then said she would make a ruling in the final judgement and ordered that the trial proceed. Indeed, the trial proceeded and judgement was entered in favour of the Respondent which judgement she seeks to execute.

At the risk of delving into the merits of the substantive application, Section 164 $(2)$ (b) of the Insolvency Act of 2011 allows even persons bound by a deed to take steps to enforce any charge over any of the company's property or to commence or continue execution proceedings or other legal process or levy distress against the company or its property with leave of Court.

In addition, Section 164 (3) further qualifies the prohibition and restricts it to creditors who voted in favour of the resolution for the execution of the deed. The Applicant has not produced any evidence to show that the Respondent is among the creditors who voted in favour of execution of the deed.

With the above background, I find that the substantive Application has minimal likelihood of success, therefore, it is my considered opinion that it is sufficient cause not to grant this application for stay, as it would only cause undue delay in the legal process.

On the other hand, even if it had high likelihood of success, the same issue was considered and a ruling made on it by the Trial Judge in her ruling on pages 17 to 19 of the record of proceedings marked as Annexure A to the Affidavit in Reply to this Application. For that matter, the issue for determination in Application No. 1348 pending before this Court is res judicata. I agree with Counsel for the Respondent that it is only the Court of Appeal with appellate jurisdiction to hear

the matter and overturn the ruring of the trial Judge conceming the commencement or continuation of legal process against the Applicant in light of the Administration Deed.

Therefore, I find that there is no need to determine other grounds like the requirement of due performance because the Application upon which this Application stems is barred by the doctrine of res judicata. The Applicant ought to have preferred an appeal in the court of Appeal if they disagreed with the finding of the triar court in civir suit No. 2g3 0f 2or6. rt is trite law that a successful party has rights to the fruits of their judgement unless it has been stayed or set aside or defeated on appeal' In this case, there is no evidence ofany successful appear and since the application for execution is not barred as seen in Section 164 (2)and (3) of the Insolvency Act, this application fails.

Subsequently, the substantive Application No. l34g has been overtaken by events and is also dismissed for being barred by raw pursuant to the principle of res judicata under Section 7 ofthe Civil procedure Act.

In summary, both Applications are hereby dismissed with costs awarded to the Respondent. Let court proceed with hearing on Notice to Show Cause why Execution should not Issue.

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HON. LADY JUSTICE ANNA B. MUGENYI DATED )...t.1.a \*s........... I