[2025] UGCommC 184

# **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL COURT DIVISION) MISCELLANEOUS APPLICATION NO. 1313 OF 2025** 5 **(MISCELLANEOUS APPLICATION NO. 1204 OF 2025) (ARISING OUT OF EXECUTION APPLICATION NO. 295 OF 2025) (ARISING OUT OF CIVIL SUIT NO. 0262 OF 2022)**

# **UNIVERSAL MULTIPURPOSE ENTERPRISES:::::::::::::::::::::::::::::::::: APPLICANT** 10 **VERSUS**

**XUE WEN JUN:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT**

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

#### 15 **RULING**

The applicant filed this application by chamber summons under section 98 of the Civil Procedure Act, Order 22 Rules 26 and 89 (1) of the Civil Procedure Rules S. I. 7l-1, as amended. The application seeks orders that: a stay of execution of the decree in *Civil Suit No. 262/2022* be granted pending determination of the applicant's appeal; and that costs of the application be

20 provided for.

The background to this application is that the applicant and the respondent herein entered into an agreement for the sale of a condominium Unit No. 88 comprised in LRV KCCA 4527, Folio 22, Plot 17-19 located at Kololo Hill Drive in Kampala at an agreed price of Ugx 405,000,00/. The

- 25 respondent paid Ugx 363,235,000/=, leaving a balance of Ugx 41,765,000; which was not paid pending the handover of the said unit to the respondent by the applicant. It was agreed between the parties that the applicant would hand over vacant possession of the unit on 20th January 2020, which was not done, and the applicant was found to be in breach of the purchase agreement. This court found that the respondent is entitled to recover Ugx 363,235,000/= being monies had and - 30 received by the defendant, with interest of 18% per annum from the date of filing until payment in full; general damages of Ugx 20,000,000 plus interest of 6% from the date of filing until payment in full; and costs of the suit. The respondent commenced execution to recover her

monies and the applicant subsequently lodged this application for stay of execution of the decree pending the determination of their appeal to the court of appeal.

- 5 The grounds of the application were stated in the affidavit in support of the application by Kakama Simon, the Company Secretary of the applicant and briefly are that: - 1) The applicant is the defendant in *Civil Suit No. 262/2022* and judgment was passed against it. - 2) Being dissatisfied with the judgment, the applicant filed an appeal and the same is 10 pending before the Court of Appeal. - 3) The respondent was notified of the appeal on 18th March 2025 since it is linked on ECCMIS. - 4) Despite having knowledge of the existence of the appeal, the respondent proceeded illegally and secretively and commenced execution proceedings vide *Execution* 15 *Application No. 295/2025*, without serving the applicant. - 5) The applicant was not served yet made part of *Execution Application No. 295/2025* under which an order of execution was granted by way of a garnishee. - 6) The respondent intentionally omitted to state whether an appeal is preferred or not in her application for execution. - 20 7) The applicant's bank accounts in Centenary Rural Development Bank, Housing Finance and Bank of Africa are frozen without justifiable reasons. - 8) Ugx 10,570,700 was included in the total sum due and attached from the applicant under the decree nisi, in form of costs yet the same has not been taxed and allowed by this court. - 25 9) The respondent has never complied with the legal requirements for execution proceedings. - 10) The application for stay of execution of the decree arising from *Civil Suit No. 262/2022* has ben filed without any or unreasonable delay. - 11) The decretal award of Ugx 500,000,000 inclusive of interest, damages and costs may not 30 be recovered from the respondent hence resulting in a substantial loss to the applicant. - 12) The applicant has sufficient asset to meet the decretal sum awarded to the respondent and the applicant undertakes to furnish security as the court shall determine as a pre-condition for the grant of the orders sought. - 13) The appeal which is already underway shall be rendered nugatory if the application is not 35 granted. - 14) The appeal has a high likelihood of success. - 15) It is just and fair that the application is granted.

The respondent opposed the application on the grounds contained in the affidavit in reply of Xue Wen Jun, the respondent/judgment creditor, wherein she briefly stated that:

- 1) the applicant sold her a house for her accommodation, received the money from her but declined to accord her possession of the said accommodation. - 5 2) The respondent filed a suit wherein court ordered a refund of her money, plus damages. - 3) She was never served with any notice of appeal or letter requesting for typed proceedings - 4) The applicant was awakened by the execution proceedings to file the instant applicant. - 5) For the duration that this matter has been in court, her family and herself have been renting expensively at USD 7,000 per month; which rent has drained her business. - 10 6) The said rent drains her business and will cripple the same if she continues renting. If she does not get the said money to secure alternative accommodation in time, she and her family will be rendered homeless. - 7) It is in the interest of justice that this application is dismissed with costs. - 8) The application is brought in bad faith with the sole intention of delaying execution. - 15 9) The application will suffer irreparable damage.

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

- The applicants were represented by Mr. David Nsobani of Kakama & Co. Advocates; 20 while the respondent was represented by Mr. Allan Bariyo, Kateregga Hassan, Mr. Joel Ayijuuka, Mr. Kitakule Swaib of Matovu Kateregga & Co. Advocates. The parties proceeded by way of oral submissions.

### **Issue for determination**

25 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?

#### **Submissions**

30 At the hearing of this application, proceeded by way of oral submissions. This court shall consider the submissions alongside the respective pleadings and authorities relied on, in the determination of this application.

### *Determination of court*

35 This application is resolved as follows:

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.

The grant of an order of stay of execution is dependent on whether the applicant has raised 5 sufficient grounds to warrant the grant. The resolution of this issue is dependent on the following:

*Issue 1: whether this application raises sufficient grounds for an order of stay of execution?* Stay of execution is provided for under Order 22 rule 26 of the Civil Procedure Rules SI 71-1 10 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 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. 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 20 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.

Order 43 rule 4 (3) of the Civil Procedure Rules SI.71 provides for the conditions that ought to be satisfied before a stay of execution is granted and they include that:

- 25 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 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:

- 35 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; - 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 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 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 20 10 th March 2025, to their application. This confirms that there is a pending suit. Order 43 rule 4 (3) of the Civil Procedure Rules, presumes that an application for stay of execution nature must be made after a notice of appeal has been filed in court.

Much as the applicant submitted that it duly filed a notice of appeal and the same was served on the respondent on 18 15 th march 2025, the respondent contended that the applicant defaulted on the filing of the appeal and was out of time to file the same. That the documents relied on by the applicant did not show proof of service to the respondent. Further there is even no evidence of the transmission of the said notice of appeal to the Court of Appeal within 7 days.

20 In this application, the applicant herein attached a notice of appeal to the affidavit in support of the application marked as "Annexture A". The attached notice of appeal was endorsed by the Registrar. There is no proof that the notice of appeal was served on the respondent, although there is an affidavit of service attached to the affidavit in support of the application which alludes to the respondent's having been served.

It is observed that the said affidavit of service indicates that the respondent was served with the notice of appeal on 18th March 2025, and yet 18th March 2025 is the date that the said notice of appeal was filed on ECCMIS and it was endorsed by the Registrar of the court on 20th March 2025. Considering that the respondent is linked to ECCMIS, he was still served with the notice 30 of appeal the moment the Registrar admitted and endorsed it on ECCMIS. According to rule 16 of the Statutory Instrument No. 21/2025 The Judicature (Electronic Filing, Service and Virtual Proceedings) Rules, 2025, documents are served electronically through a registered email address or telephone or other approved electronic communication service. In the premises, considering that the respondent is linked on ECCMIS in this matter, she was duly served.

There is no doubt, therefore, that there is a pending appeal.

## *The appeal has a likelihood of success*

It is a requirement that the said appeal should have a likelihood of success. The appeal should 40 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* 5 *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 10 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.

The applicant submitted that its appeal has a high likelihood of success. The respondent, 15 however, relied on the case of *Ejulu Martin vs Itobu MA 160/2022*, to submit that the likelihood of success of the intended appeal is a strong consideration as to whether Execution should be stayed or not. The respondent further argued that there was no memorandum of appeal attached to the affidavit in support in the instant application; and that court does not know the grounds which the applicant would want to argue before the court of appeal; without prejudice to the fact 20 that there is no appeal and the applicant is out of time to file the same.

In this application, the applicant did not furnish court with a copy of their memorandum of appeal to enable court establish whether their appeal had a likelihood of success or if it is one that is frivolous. However, the applicant attached proof to show that an application was made for a copy of the certified record of proceedings. To this end, a letter dated 18 25 th March 2025 and addressed to the Registrar, Commercial Division, was attached to the affidavit in support of the application and was filed on ECCMIS on 18th March 2025. The said letter requests for the court record of proceedings to enable the applicant file its appeal at the Court of Appeal; however, the record of proceedings was not availed by court. The failure to satisfy this requirement was of no 30 fault of the applicant, although the applicant ought to have attached proof of followup on the same to satisfy court that the appeal and this application are not just an attempt at inhibiting the respondent from enjoying the fruits of litigation.

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

Under this consideration, it is required 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 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

5 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.

In this instance, the applicant contended that if respondent is permitted to garnishee the decretal award of Ugx 500,000,000 inclusive of interest, damages and costs, substantial loss may result to the applicant. The applicant also contended that as a result of the issuance of the order of a decree nisi, they are unable to access their bank accounts and yet they are business accounts.

The respondent on the other hand submitted that the applicant sold her a condominium unit, received the monies but declined to accord her possession of the same. Upon instituting a suit against the applicant, court ordered a refund of the said monies plus damages and interest. The respondent further submitted that as a result of the applicant's refusal to accord her the said unit, 20 her family has been renting premises expensively which has drained her business.

Much as the applicant has submitted that its operations will be affected if execution is not stayed, the respondent/judgment creditor has been equally if not more constrained due to the hardship stemming from the botched purchase of the condominium unit for the past five years, which the 25 applicant sold but never gave her possession thereof, or refunded the said sums. The respondent entered into an agreement to purchase a condominium Unit No. 88 comprised in LRV KCCA 4527, Folio 22, Plot 17-19 located at Kololo Hill Drive in Kampala at an agreed price of Ugx 405,000,00/. The respondent paid Ugx 363,235,000/=, leaving a balance of Ugx 41,765,000; which was not paid due to the failure by the applicant to handover the said unit. The applicant was to hand over vacant possession of the unit on 20th 30 January 2020 which has never been done, and the applicant was found to be in breach of the purchase agreement. This court found that the respondent is entitled to recover Ugx 363,235,000/= being monies had and general damages of Ugx 20,000,000 plus interest on the same from the date of judgment until payment in full.

35 From the foregoing, it is clear that the respondent has been subjected to undue hardship as she was unable to enter the said unit from the time of the botched purchase in February 2020 to date. A grant of a stay of execution would amount to a continued violation of the respondent's right to get back the monies that she paid in 2020 for the condominium unit.

40 I find that the applicant has not satisfied this ground.

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

An application for stay of execution ought to be made within a reasonable time. The 5 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 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 10 October

2021.

In the instant case, a decision was rendered by Hon. Cornelia Sabiiti Kakooza *Civil Suit No. 0262/2022* on 12th March 2025. The applicant then appealed against the decision and a notice of

appeal was filed on 18 th March 2025; and this application was subsequently brought on 13th 15 June 2025 and endorsed by the Registrar on 17th June 2025, upon the applicant's learning of the issuance of a *decree nisi* against them. In the circumstances, there was no unreasonable delay in the filing this application by the applicants.

# 20 *4. 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 this particular application, the applicant undertook to pay security for due performance of the decree if required by court, as a pre-condition for the grant of the orders sought. The applicant submitted that it has sufficient assets to meet the decretal sum awarded to the respondent.

No contention was raised on this consideration for a grant of stay of execution.

## *5. 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*

- 30 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, 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. - 35 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 has 40 commenced since a decree nisi has already been issued by court and the applicant's eight bank accounts have been frozen, although no proof was availed to confirm the freezing of the said bank accounts. The applicant also contended that they were never notified about the execution proceedings as required by law and that a denial of the application would render the appeal nugatory.

It should, be borne in mind that the Ugx 363,235,000/= that this court ordered the applicant to pay the respondent vide *Civil Suit No. 262/2022* was entered on judgment on admission. This was the money that the applicant received from the respondent and never returned it upon failure to handover the condominium unit that the applicant had paid for. This is money owed to the 10 respondent, as well as the damages and interest that was granted by this court.

Court has a duty to balance between the interests of the respondent who was the successful litigant in *Civil Suit No. 262/2022* and wishes to execute the decree; and the interests of the applicant who was the unsuccessful litigant and wishes to pursue an appeal and has an appeal in

- 15 motion. The applicant/ judgment creditor paid for a condominium unit, for dwelling purposes, the applicant/judgment debtor received the substantial part of the money but declined to give vacant possession to the respondent in utter contravention of the agreement between the parties and caused her undue hardship from the date of breach to the present. - 20 Much as the applicant satisfied some of the considerations for a grant of an order of stay of execution pending appeal, in the interest of justice, it is only fair that the application is denied. This application, therefore, fails due to the reasons stated in this ruling and is hereby dismissed with costs to the respondent.

25 I so order.

*Dr. Ginamia Melody Ngwatu* 30 *Ag. Judge 19th June 2025*

*Ruling delivered via ECCMIS*