[2024] UGCommC 350


# **IN THE HIGH COURT OF UGANDA SITTING AT KAMPALA COMMERCIAL DIVISION**

Reportable Miscellaneous Application No. 2501 of 2024 (Arising from Civil Suit No. 0055 of 2023)

In the matter between

## **VIVO ENERGY UGANDA LIMITED APPLICANT**

**And**

## **C & A TOURS AND TRAVEL OPERATORS LIMITED RESPONDENT**

## **Heard: 20th November, 2024. Delivered: 21st November, 2024.**

*Civil Procedure - Execution - a decree for purposes of execution must be regarded as a whole and indivisible: when it is sought to be enforced, it must be executed as a whole and not split up into parts - a party cannot appeal parts of the decree while at the same time seeking to enforce other parts - Garnishee proceedings - Garnishee proceedings are separate and distinct actions between the judgment creditor and the Garnishee - the second stage of the proceedings at the end of which a garnishee order nisi is made absolute envisages a tripartite proceeding in which all interests are represented - Order 22 rule 19 of The Civil Procedure Rules - Notice to show cause why execution should not issue - Order 23 of The Civil Procedure Rules is a self-contained process and prescribes its own procedures. There is no provision under Order 23 requiring a Notice to Show Cause to issue.*

## **RULING**

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## **STEPHEN MUBIRU, J.**

#### The background;

- [1] The applicant and the respondent signed a series of three-year retailer dealership agreements beginning 1st January 2002 and expiring in January, 2005 which gave licence to the respondents to operate the applicant's three petrol stations, namely; Shell Jinja Road Service Station, Shell Kawempe Service Station and Shell Nakivubo Road Service Station. These three petrol stations previously were managed as a sole proprietorship of a one Captain Naeem Shair Chaudry. Sometime before the year 2002, the applicant effected a policy change requiring that only limited liability companies operate its petrol stations and so Captain Naeem Shair Chaudry proceeded to incorporate the respondent which then execute the said retailer dealership agreements with the applicant for the same three petrol stations. Following disagreements sparked off by the applicant's instance on the respondent assumption of debt obligations incurred by the previous management of the fuels station, the respondent sought to terminate the respondent's three dealership agreements by a letter dated 6th February, 2003 on grounds that the respondent was not operating the said petrol stations effectively as the applicant would wish. - [2] On or about 7th February, 2003 the respondent sued the applicant for breach of contract, seeking to obtain remedies including special damages amounting to shs. 1,744,903, 865/=, general damages, interest, detinue, conversion and the costs of the suit. During the trial, a judgment on admission in the sum of shs. 148,000,000/= was on 8th December, 2015 entered in favour of the respondent. Subsequently, a final Judgment was on 18th June, 2020 entered in the respondent's favour in the sum of shs. 70,000,000/= as damages for loss of income; shs. 4,680,537/= as damages for conversion and detinue of the respondent's fixed assets at Shell Nakivubo; shs. 2,000,000/= as damages for conversion and detinue of the respondent's fixed assets at Shell Jinja Road; shs. 149,072,184/= for lost stock and receivables; shs. 178,931,600/= as damages incurred for payment of interest on the loan facility from Barclays Bank which was re-structured to a term loan; shs. 125,000,000/= as general damages for breach of contract; interest thereon at the

rate of 19% per annum from the date of judgment until payment in full' shs. 404,684,321/= as special damages; and the costs of the suit. The applicant's counterclaim was dismissed.

- [3] Being dissatisfied with the decision, the applicant on or about 21st October, 2020 filed an appeal to the Court of appeal against the entire decision. In response, the respondent on or about 10th November, 2020 filed a notice of cross-appeal seeking a partial variation or reversal of some of the awards made in the judgment, more specifically relating to the general and special damages. In effect the respondent seeks an enhancement of the quantum of both categories awards. Both the appeal and cross-appeal are pending hearing before the Court of Appeal. The applicant filed an application seeking a stay of execution pending the appeal, which application was dismissed. - [4] In the meantime, the respondent on 18th October, 2024 made an *ex-parte* application for a garnishee *order nisi* and it was duly granted on 13th November, 2024 in the following terms;

IT IS HEREBY ORDERED that a sum of UGX. 3,096,932,562/= (UGANDA SHILLINGS THREE BILLION NINETY-SIX MILLION NINE HUNDRED THIRTY-TWO THOUSAND FIVE HUNDRED SIXTY-TWO ONLY) being part of money held by the Garnishee on behalf of the Judgment Debtor on ACCOUNT NO. 9030005948222 be attached in satisfaction of the Decree entered against the Judgment Debtor in favour of the Applicant in H. C. C. S No. 55 of 2003, C&A TOURS & TRAVEL OPERATORS LIMITED V VIVO ENERGY UGANDA LIMITED in the sum of UGX. 3,096,932,562/= {UGANDA SHILLINGS THREE BILLION NINETY-SIX MILLION NINE HUNDRED THIRTY-TWO THOUSAND FIVE HUNDRED SIXTY-TWO ONLY) together with the costs of this Application

### The Application;

[5] The application by Notice of motion is made under the provisions of Order 22 Rules 19 and 89 of *The Civil Procedure Rules*. The applicant is seeking orders that; (i) the *ex-parte* garnishee proceedings and order issued in Miscellaneous Application No. 2204 of 2024 be vacated, and that (ii) the costs of this application be provided for. It is the applicant's case that the respondent did not serve the applicant with the mandatory notice to show cause why execution should not issue, as required by the law. It is further contended that the decretal sum contained in the garnishee *order nisi* was wrongly calculated.

### The respondent's affidavit in reply;

- [6] By its affidavit in reply, the respondent averred that for the applicant has since the delivery of the judgment, never taken any steps toward payment of the decretal sum. The judgment was entered more than four years ago and the Judgment Creditor has since been denied the fruits of its judgment, even for the judgment on admission. There is no justification for vacating the garnishee *order nisi* against the applicant in the sum of shs. 2,540,745,978/= notwithstanding the error in computation of the entire decretal sum. The respondent cannot be faulted for taking out an ex-parte Garnishee *Order Nisi* against the applicant. The *Order Nisi* was served on the applicant who, together with the Garnishee was summoned to appear in Court on 22nd November, 2024 at 12:30 pm to show cause why the *order nisi* should not be made absolute. - [7] The notice to show cause why execution should not ensue against a Judgment Debtor envisaged under Order 22 rule 19 of *The Civil Procedure Rules* achieves exactly the same objective as Order 23 Rule 1 (3) of *The Civil Procedure Rules* that requires both the Judgment Debtor and Garnishee to appear in Court and show cause why the *order nisi* should not be made absolute. There is no order staying execution of the Decree in issue and no justification to vacate the Garnishee *nisi* when the applicant has between now and 22nd November, 2024 to show cause why execution should not issue against it.

### The submissions of Counsel for the applicant;

[8] Counsel for the applicant submitted that under Rule 91 of *The Court of appeal Rules* a notice of cross appeal initiates an appeal. The principle of approbation and reprobation applies to this case. The notice of cross appeal deals with parts of the decree. Under *The Court of appeal Rules* appeals are withdrawn with the leave of court under rule 94. It cannot be withdrawn by notice. The NTC is provided for under Order 22 rule 19 and attachment of debts is one of the modes of execution. In *DFCU Bank Ltd v. Supply maters Limited, H. C. Civil Appeal No. 1185 of 2021* at page 7 and 8 it was held that a garnishee order nisi may be vacates where it is inequitable. The other reason for setting aside the *order nisi* is that it has a figure shs. 3,182,720,362/= when it should be shs. 2,390,750,143/= as conceded in the respondent's affidavit in reply. The ex-parte garnishee process is justified only if execution is done within a year; if it exceeds a year it is subject to the NTC process. The notice given under Order 23 of *The Civil Procedure Rules* is for the garnishee while that under Order 22 rule 19 is for the judgment debtor.

### The submissions of Counsel for the respondent;

[9] Counsel for respondent submitted that the errors in the figure contained in the order nisi are conceded and the correct figure is that stated by the applicant. It is a computational error that should not result in vacating the order. The equivalent of the notice to show cause is the *order nisi* in garnishee proceedings as per Order 23 riule1 (3) of *The Civil Procedure Rules*. The order preserves the funds before attachment. In *Nyandoro and Company Advocates v. National Water Conservation and Pipeline Corporation; Kenya Commercial Bank Group Limited (Garnishee) [2020] eKLR* it was held that Order 23 is excluded from the requirements of the notice to show cause procedure. Rule 96 of the Court of appeal rules the crossappellant is at liberty to withdraw at any time. The *order nisi* should not be vacated.

#### The Decision;

- [10] A garnishee proceeding is one of the modes of enforcing a money judgment against a judgment debtor. It is a procedure by which a judgment creditor may obtain a Court order against a third party who owes money to, or holds money for, the judgment debtor. Garnishment may be served upon persons who hold earnings of a judgment debtor and upon persons or entities who are in the possession and control of a judgment debtor's credits, debts, money, choses in action, or personal property of any kind. Such orders are "usually obtained against a bank requiring the bank to pay money held in the account of the debtor to the creditor" (see *Osborn's Concise Law Dictionary*, 9th edition, page 181 and *Choice Investments Ltd. v. Jeromnimon [1981] 1 All E. R. 225*). Personal property capable of manual delivery owed to, or owned by, the judgment debtor, and in the possession or control of the garnishee at the time of service of such writ upon the garnishee, is subject to the process of garnishment. - [11] A *Garnishee nisi* is an interim or provisional order which states in essence that the court does not see any reason why the funds should not be attached in satisfaction of the judgment debt. It specifies the date on which the final order will be made unless a good reason for not to granting such an order is produced. A "garnishee" is a person who has been warned not to pay a debt to anyone other than the third party who has obtained judgment against the debtor's own creditor. Once served, the garnishee holds the property of the debtor in *custodia legis* and the debtor's property comes within the jurisdiction and control of the court. Attachment creates no charge or lien upon the attached property. It only confers a right on the decreeholder to have the attached property kept *in custodia legis* for being dealt with by the court in accordance with law. - [12] As soon as the garnishee *order nisi* is served on the garnishee, it operates as an injunction. It prevents the garnishee from paying the money to the judgment debtor until the garnishee order is made absolute, or is discharged, as the case may be

(see *Makumbi Francis Xavier Gajuule v. National Insurance Corporation [1979] HCB 230* and *Choice Investments Ltd v. Jeromnimon [1981] QB 149*). It does not confer any title on the attaching creditors. It prevents and avoids private alienations; any private alienation without leave of the Court of the property attached, whether by sale, gift or otherwise and any payment of any debt or debts or dividends or shares to the judgment debtor during the continuance of the attachment, is null and void as against all claims enforceable under the attachment (see section 47 of *The Civil Procedure Act*).

- [13] Judgment debtors are perceived not to be necessary parties to Garnishee proceedings at this stage, based on the Courts' notion that Garnishee proceedings are separate and distinct actions between the judgment creditor and the Garnishee. They are proceedings between the judgment creditor and the person in possession of the assets of the judgment debtor. - [14] The second stage of the proceedings at the end of which a garnishee *order nisi* is made absolute envisages a tripartite proceeding in which all interests are represented. It is the stage at which the Court has to ascertain whether there are such funds as are at the disposal of the garnishee belonging to the judgment debtor can satisfy the judgment debt. That is when the judgment debtor has the opportunity to convince the court to discharge the *order nisi* by filing affidavits to that effect. A garnishee on whom an *order nisi* has been served has to appear and show cause why an order absolute should not be made. The order is made absolute, directing the garnishee to pay to the judgment creditor or into Court, whichever is the more appropriate, unless there is some sufficient reason why the garnishee should not honour it, or if payment to this creditor might be unfair to prefer him to other creditors. - [15] After that hearing on notice, the court may discharge the *order nisi* or make it an order absolute. The judgment debtor may convince the Court by way of the affidavit to discharge the *order nisi*, for instance, where it is proved that the judgment

leading to the garnishee proceedings, was obtained by fraud, non-service of the originating process of the main suit or any other vitiating factor on basis of which the court has the power to set aside its own judgment and has indeed since been set aside, or even the fact of payment or liquidation of the judgment sum which is being sought to be realised by way of enforcement.

- [16] The essence of garnishee proceedings is enforcement of money judgment which money is in the hands of a third party but held in favour of the judgment debtor. A garnishee order being in the form of an equitable remedy, the court may refuse to make the order absolute if it finds that the attachment of the debt would be inequitable (see *Deutsche Schachtbau-und Tiefbohrgesellschaft mbH v. Shell International Petroleum Co Ltd [1990] 1 AC 295*, such as, if it would affect the interests of other persons, prejudice the rights of other creditors, or cause the judgment debtor to be liable for the debt twice). Thereupon the Court may decline to make the *order nisi* absolute and instead discharge it. While the right of appeal against a garnishee *order nisi* proceeding resides solely in the judgment creditor and the garnishee, thus precluding the judgment debtor, however, in garnishee absolute proceedings the judgment debtor has an inherent right of appeal, being a party to the proceedings at that stage. - [17] Similarly, where there is a failure to disclose material facts within the knowledge of the applicant in an *ex parte* application or where there is any material misrepresentation, it will result in the court setting aside the *ex parte* order obtained (see *C&B Enterprises Limited v. Liege Zambia Limited, HPC 218 of 2016*). This is because any *ex parte* application is an application *uberrimae fidei* i.e. of the utmost good faith and the Court has to rely on the unilateral version of the applicant who must candidly and faithfully tell the truth, the whole truth and nothing but the truth. Anything short of that utmost good faith will invariably render the *ex parte* application fundamentally flawed and on that ground alone, result in the inevitable setting aside of the *ex parte* order so obtained. Failing to disclose salient facts would be to conceal material information. It would be a subset of misleading the Court and would, ultimately, amount to an abuse of process. It may also be set aside where money liable to be attached by garnishee proceedings is in the custody or under the control of a public officer in his official capacity or in *custodia legis*, unless consent of the court to such attachment is first obtained.

## i. Impact of the cross-appeal on the garnishee proceedings.

- [18] It is trite that a decree is one and indivisible. A decree for purposes of execution must be regarded as a whole and indivisible: when it is sought to be enforced, it must be executed as a whole and not split up into parts. A judgment-creditor has only one judgment and decree, and upon that judgment and decree he may take out only one execution, not split executions. A decree for payment of a sum of money and for costs of the suit is one and indivisible (see *Ram Chandra Naik Kalia v. Abdul Hakim (1913) I. L. R. 35 All. 204*). A judgment-creditor can only take out a single execution upon his judgment and cannot split up the judgment debt and issue separate executions upon the different parts. A judgment-creditor cannot take out a series of small executions upon his judgment making in the whole, the total amount of the judgment debt. - [19] By seeking to enforce a decree a party adopts its correctness and cannot at the same time seek to appeal it on grounds that parts of it are incorrect. When a decree shows plainly that it is intended to take effect in its entirety and that several parts of it depend upon each other, a party cannot adopt one part and repudiate another (see *Tinkler v. Hilder, (1849) 4 Ex. 187: 154 E. R. 1176*). A person who takes benefit under a decree cannot repudiate that part of the decree which is detrimental to him, on the ground that he cannot be allowed to approbate and reprobate. The doctrine of approbate and reprobate is a legal principle that refers to a person or entity taking inconsistent positions in legal proceedings or actions. In other words, a party cannot approve of or benefit from an action in one instance and then disapprove of it in another instance (see *Verschures Creameries v. Hull and Netherlands Steamship CO., [1921] 2 K. B. 608* and *Lissenden v. C. A. V. Bosch*

*Ltd., [1940] A. C. 412*). The doctrine of approbate and reprobate and underlying doctrine of election is a rule of equity. Where a person knowingly accrues the benefits of an instrument, he is estopped from denying the validity or the binding effect of such instrument. In essence, the doctrine is about preventing an inconsistent conduct and ensuring a just outcome.

- [20] The doctrine of approbate and reprobate applies not only to the successive stages of the same suit, but also to another suit other than the one in which the position was taken up, provided the second suit springs from the judgment in the first. An appeal imperils partly or wholly the decree sought to be executed. According to Rule 91 (1) of *The Judicature (Court of Appeal Rules) Directions*, a respondent who desires to contend at the hearing of the appeal in the court that the decision of the High Court or any part of it should be varied or reversed, either in any event or on the appeal being allowed in whole or in part, is required to give notice to that effect, specifying the grounds of his or her contention and the nature of the order which he or she proposes to ask the court to make, or to make in that event, as the case may be. - [21] The rule does not require a cross-appellant to file a memorandum of appeal. If the appeal is struck out, the effect of striking out the appeal is for practical purposes the same as when the appeal fails after an ordinary hearing of any appeal. Indeed, where an appeal is withdrawn, a cross-appeal can be heard as if it was an appeal (see *Goodman Agencies Ltd v. Attorney General and another, S. C. Constitutional Application No 1 of 2012*). Therefore, a notice of cross appeal constitutes a valid appeal in its own right. - [22] That being the case, the respondent has a subsisting appeal arising from the decree it has now sought to execute at the same time, before the cross-appeal is disposed of. The doctrine of approbation and reprobation prevents the respondent taking inconsistent positions with regard to the decree. It cannot appeal parts of the decree while at the same time seeking to enforce other parts. At the hearing of

the application, counsel for the respondent undertook to withdraw the cross-appeal before the scheduled return date of the *order nisi*. According to Rule 96 (1) of *The Judicature (Court of Appeal Rules) Directions*, a respondent who has given notice of cross-appeal may withdraw it at any time before the appeal is called for hearing by lodging in the appropriate registry notice in writing to that effect, signed by him or her or on his or her behalf. It is only after that is done that the respondent may be able to proceed with the next step in the garnishee process, failure of which it may form a ground for the Court to decline to make absolute, the *order nisi*. but does not constitute a ground for setting aside or vacating the *order nisi*.

## ii. Applicability of the requirement of issuance of a notice to show cause.

- [23] As a general rule the law does not require any notice to be issued for execution of a decree. One of the exceptions to the general principle is under Order 22 rule 19 of *The Civil Procedure Rules* which provides that where an application for execution is made more than one year after the date of the decree, the court executing the decree is required to issue a notice to the person against whom execution is applied for, requiring him or her to show cause, on a date to be fixed, why the decree should not be executed against him or her. The procedure provides an opportunity for the judgment debtor to raise claims or objections against the execution of the decree on the day and date fixed for hearing. - [24] Although a garnishee proceeding, just like other modes of execution of a decree, is aimed at recovering the fruits of a judgment, Order 23 rules (1) of *The Civil Procedure Rules* provides that a Judgment Creditor approaches the court by way of an *ex parte* application for an *order nisi* to attach monies belonging to the Judgment Debtor in the custody of Garnishees. "Ex-parte" in this context means the application is made to the Court only, without the presence of the Judgment Debtor at the hearing. The provision suggests that the court has the discretion to hear the Judgment Debtor in an application for a garnishee *order nisi* either before or after granting the garnishee *order nisi*. The principle of the law is that, the

judgment debtor is insignificant in a garnishee proceeding and not expected or required to respond to garnishee *order nisi* or absolute. This is so because even if the judgment debtor is a party to the substantive suit, he is not a necessary party to the garnishee proceedings. In other words, it is the court that determines whether a judgment debtor should be heard or not. Where the court considers it appropriate for the judgment debtor to be heard, it may direct that the application be made *inter parties*. Otherwise, it is inimical to require as a matter of course, a notice to show cause to issue in respect of a stage of this process specifically designed to be *ex parte* as the default position.

- [25] Service of the *order nisi* prevents the garnishee from paying the money to the Judgment Debtor until the garnishee order is made absolute, or is discharged. The money in the hands of the garnishee is then said to be "attached." but the "attachment" is not an order to pay. It only freezes the sum in the hands of the garnishee until the order is made absolute or is discharged. It is only when the order is made absolute that the garnishee is liable to pay (see *Choice Investments Ltd v. Jeromnimon [1981] QB 149 at 155* and *Makumbi Francis Xavier Gajuule v. National Insurance Corporation [1979] HCB 230*). Once the *ex-parte* order has been obtained, it (the order) together with all the attendant pleadings are to be served on both the Judgment Debtor and the Garnishee. The parties are to then return for an inter-parties hearing as to why it should not be made absolute. It is then that the Garnishee and / or the Judgment Debtor will "show cause" at the hearing for the Garnishee Order Absolute. - [26] It is not the duty of the garnishee to make out a case for the judgment debtor. The role of a garnishee in any garnishee proceeding is delimited. It is not envisaged that after a judgment creditor has gone through the rigours to establish his rights through the trial leading up to the judgment, that the garnishee, who is asked to surrender the judgement debtor's money in its possession should engage the judgment creditor in another bout of legal battle. One of the main reasons underlying serving the Judgment Debtor is to avoid embarrassment on the

judgment debtor of not having the prior knowledge that funds earmarked for some purposes that have now become prone to being diverted in satisfaction of a judgment debt, which he may be unaware of, when the *order nisi* is made absolute.

- [25] Even then, a judgment debtor is merely a nominal party whose money in the custody of the garnishee is being recovered by the judgment creditor in satisfaction of the judgment debt he owes the judgment creditor. It is the primary duty of a garnishee to appear in Court upon receipt of the *order nisi*, and show cause why the funds in the judgment debtor's account should not be paid over to the Judgment Creditor in satisfaction of the judgment debt. This is done by filing an affidavit to show cause with all the relevant documents, disclosing the true picture, status or standing of the judgment debtor's accounts at the time of the service of the Garnishee Order Nisi. The judgment debtor is not the one requested to appear before the court to show cause why the *order nisi* should not be made absolute. It is only the garnishee, and only the garnishee, expected to inform the court if there is any third party interest in the said judgment debtor's money in its custody. So, in all ramifications, it is only the garnishee that is expected to react. The judgment debtor may be heard only with the leave of Court. - [26] This view is buttressed by the decision in *Nyandoro and Company Advocates v. National Water Conservation and Pipeline Corporation; Kenya Commercial Bank Group Limited (Garnishee) [2020] eKLR para 12; [2021] KEHC 13342* where it was held that Order 23 of *The Civil Procedure Rules* is a self-contained process and prescribes its own procedures. There is no provision under Order 23 requiring a Notice to Show Cause to issue. The only requirement under Order 23 Rule 1 is the existence of an unsatisfied decree, the amount and another person is indebted to the Judgment-Debtor. It follows that failure to issue a prior notice to show cause, cannot form the basis for setting aside a garnishee *order nisi*.

iii. Impact of computational errors in the decretal sum.

.

- [27] It was admitted by the respondent that the decretal amount stated in the *order nisi* of shs. 3,096,932,562/= is incorrect. The correct figure is shs. 2,540,745,978/= This apparently arose out of an inaccurate computation of the accrued interest over the years since the decree was issued. The correction of a clerical error in the final orders of court is an exception to the general rule that no amendment or correction may be made by the court in its judgment once the latter has become final. Clerical errors are best exemplified by typographical mistakes or arithmetic miscalculations. They also include instances when words are interchanged. An arithmetical error is a mistake of calculation, and a clerical error is a mistake in writing or typing. - [28] Clerical errors or ambiguities in the dispositive portion of a decree, warrant of attachment, garnishee order nisi or other order of court, may result from inadvertence. Such errors can be rectified without violating the doctrine of immutability of a judgment, provided that the modification does not affect the substance of the controversy. Under section 99 of *The Civil Procedure Act*, clerical or mathematical mistakes in judgments, decrees or orders, or errors arising in them from any accidental slip or omission may at any time be corrected by the court either of its own motion or on the application of any of the parties. - [29] A garnishee *order nisi* may not be set aside, reversed or substantially varied on account of any error, defect or irregularity which does not affect the merits of the garnishee proceedings, or the jurisdiction of the court. Clerical and arithmetical mistakes in a decree, warrant of attachment or garnishee *order nisi* arising from error, miscalculation, oversight, accidental slip or omission, may be corrected by the court at any time under the provisions of section 99 of *The Civil Procedure Act*. The decretal amount in the garnishee *order nisi* being subject to correction under the slip rule by the Registrar executing the decree, before it is made absolute, that it contains arithmetical inaccuracies cannot form the basis for setting it aside in the

instant case. For all the foregoing reasons, the application lacks merit and it is accordingly dismissed with costs to the respondent.

Delivered electronically this 21th day of November, 2024 …Stephen Mubiru……..

Stephen Mubiru Judge, 21st November, 2024

## Appearances;

For the applicant : M/s S & L Advocates. For the respondent : M/s MMAKS Advocates.