Babuge Trading Co. Limited v Shaka & Another (Miscellaneous Application 8 of 2024) [2024] UGHC 1066 (28 October 2024)

**THE REPUBLIC OF UGANDA**

**IN THE HIGH COURT OF UGANDA AT KASESE**

**HCT-25-LD-MA-0008-2024**

**(FORMERLY FORT PORTAL HCT-01-CV-LD-0011-2016)**

**BABUGE TRADING CO. LTD::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT**

**VERSUS**

1. **SHAKA AUGUSTINE** 2. **COMMISSIONER LAND REGISTRATION:::::::::::::::::::::::::::::::: RESPONDENTS**

**BEFORE JUSTICE DAVID S. L. MAKUMBI**

**RULING**

**REPRESENTATION:**

Applicant represented by Bagyenda & Co. Advocates

1st Respondent represented Ngaruye Ruhindi, Spencer & Co. Advocates

**BACKGROUND:**

This application is brought by Notice of Motion under Section 33 of the Judicature Act; Section 98 of the Civil Procedure Act; and Rule 2(2) of the Judicature (Court of Appeal Rules) Directions and seeks orders that:

1. Stay of Execution of the decree in Civil Suit HCT-01-CV-LD-011-2016 is issued to preserve the status quo on the suit land and halt recovery of taxed costs vide Execution Applications No. 004 of 2024, No. 005 of 2024, No. 006 of 2024 pending the hearing and final determination of Court of Appeal Civil Appeal No 255 of 2024. 2. The Costs incidental to and for the application be provided for.

The grounds for the Application are supported by the affidavit of Muhindo Jackson, a Director of the Applicant and are stated as follows in brief.

The Applicant filed Civil Suit HCT-01-CV-LD-011-2016 against the Respondents which was ultimately dismissed with costs to the 1st Respondent and an order issued directing the 2nd Respondent to cancel the Applicant’s Certificate of Title for land comprised in FRV HQT 250 Folio 2, Plot 117-119 located along Kilembe Road in Kasese Municipality.

The Applicant being dissatisfied with the judgment and orders of the High Court took immediate steps to commence and file an Appeal before the Court of Appeal vide Civil Appeal No. 255 of 2024.

The documents related to the Appeal have since been served on the Respondents and the matter is pending conferencing. The Appeal is a first appeal based on errors of law and fact for which the Applicant believes there is a high likelihood of success and the Applicant seeks orders from the Court of Appeal setting aside the judgment and decree of the High Court and declaring it as the lawful owner of the suit property and for the costs of the appeal and High Court be granted to the Applicant.

Upon receipt of the Notice of Appeal the 1st Respondent filed three Taxation Applications for which an amicable consent was reached for a combined sum of UGX 56,925,600. The 1st Respondent then subsequently hurriedly filed three Execution Applications in respect of the taxed amount seeking attachment and sale of the Applicant’s properties before the hearing of the Appeal.

The granting of the Execution Applications would have the effect of causing the Applicant substantial losses and render the pending Appeal nugatory and also run the risk of a multiplicity of proceedings.

The Applicant seeks the preservation of the status quo to avoid rendering the Appeal nugatory and undertakes to deposit the duplicate Certificate of Title for an alternative piece of land in Court in case the Court should deem it necessary.

The 1st Respondent responded to the Application by way of Affidavit and contended that the Applicant’s appeal has no chances of success and was another in a series of unsuccessful litigations concerning the subject matter. The 1st Respondent then went on to state at length The 1st Respondent further contended that the land offered by the Applicant as security was not sufficient security at all as it was of lesser value than the suit plots and bore no proof of current value. The 1st Respondent further contended that access to the land in question would be a challenge as it was within the home area of the Applicant Director’s home and yet the Applicant shareholders and supporters have been violent.

The Applicant responded by way of Affidavit in Rejoinder by which Muhindo Jackson contended that the Application was for stay of execution of recovery of costs and that the suit land was not the subject for which the stay of execution was sought.

The Applicant further contended that the issue pending appeal before the Court of Appeal concerns fraud requiring exhaustive scrutiny before the Court of Appeal. The Applicant further argued that the security offered for costs was not unreasonable and that in any case it was upon the discretion of court.

The 2nd Respondent never entered appearance with regard to this application and the same will therefore be determined ex parte with regard to the 2nd Respondent.

**Applicant’s Submissions:**

Counsel for the Applicant Mishele Geoffrey cited Section 33 of the Judicature Act; Section 98 of the Civil Procedure Act; Order 52 of the Civil Procedure Rules; and Rule 2(2) of the Judicature (Court of Appeal Rules) Directions. He further cited decisions in the cases of **Francis M. Micah v Nuwa Walakira (1992-93) HCB 88**; **National Enterprise Corporation v Mukisa Foods – CACA No. 7 of 1998; Lawrence Musiitwa Kyazze v Eunice Businge – SCCA No. 18 of 1990; Hon Theodore Sekikubo & Others v AG & Others – Constitutional Application No. 3 of 2014;** and **Kyambogo University v Prof. Isaiah Omolo Ndiege – CACA No. 34 of 2013** as foundations for the Application.

Counsel laid out the background of the Application and posed two issues for determination:

1. Whether the Applicant has satisfied the conditions for grant of a stay of execution. 2. What remedies are available to the parties.

Concerning the first issue Counsel argued on the basis that:

1. There was a serious or eminent threat of execution of the decree/ order. Counsel placed reliance on the decision in **Baguma Paul t/a Panache Associates v Eng. Karuma Kagyina – HCMA No. 460 of 2020** and argued that by virtue of the pending Execution Applications there was serious risk of the Applicant losing property before the Appeal is determined. Counsel further argued that there was need to preserve the status quo in light of the imminent cancellation of the Applicant’s title to the suit land. The Applicant accordingly attached copies of the Notices to Show Cause why Execution Should not Issue. 2. There was a pending appeal vide CACA No. 255 of 2024 and cited decisions in **Former Employees of G4S Security Services v G4S Security Services Ltd – SCCA No. 18 of 2010;** and **Lawrence Musiitwa v Eunice Businge (cited above)** as the basis for his argument that a pending appeal was grounds for stay of execution. 3. There was a probability of success of the appeal. Counsel argued that it sufficed that there was a pending Appeal as evidenced by the Memorandum of Appeal raising issues of law and fact. Counsel further argued that there was a serious issue of law as the Trial Judge had not properly addressed the issue of fraud when he found in favour of the Respondent whose proprietorship was determined based on an undated and unsigned instrument. 4. There was a risk of substantial loss. Counsel cited the case of **Tropical Commodities Supplies Ltd and 2 Others v International Credit Bank Ltd (In Liquidation) [2004] 2 EA 331** to argue that the Applicant faced great risk of substantial loss as any properties liquidated in execution would not be recoverable. 5. The Application is brought without undue delay. Counsel argued that the Applicant having been served with Notices to Show Cause against execution on 8th May 2024, filed the Application six days later on 14th May 2024. 6. Concerning security for costs Counsel argued that security for costs was not a condition precedent to grant of stay of execution but was at court’s discretion citing **Imperial Royale Hotel Ltd & 2 Others v Ochan Daniel – HCMA 111 of 2012.** Counsel further argued that in any event the title LRV 3272 Folio 8, Plot 5 Bukonjo Block 34 was more than adequate security being 32.1 hectares. 7. Concerning the balance of convenience Counsel argued that the subject in dispute was land which is a fixed asset and that should the High Court decree not be stayed the 1st Respondent would not be inclined to respond to the Appeal and would also transfer the same to a third party.

**Submissions in Reply:**

Counsel for the 1st Respondent argued that the 1st Respondent did not substantially object to the Applicant’s Application for Stay of Execution the circumstances of the case warranted the Applicant making a cash security. Counsel further argued that the proof of purchase of the proposed security provided by the Applicant was not sufficient evidence of the value of the property proposed for the land proposed as security. Counsel for the 1st Respondent argued that the land in question lacked a valuation report and being leasehold it also lacked terms of the lease offer. Counsel further argued that the land in question has third parties in occupation and would be difficult to dispose in the event that the appeal was unsuccessful.

Counsel argued that considering the nature of the case a cash security would be more appropriate as the Applicant had already lost the battle for the suit land in two prior legal proceedings.

**Submissions in Rejoinder:**

By way of rejoinder Counsel for the Applicant argued that while it was appreciated that the main objective for the 1st Respondent was to recover costs in cash, the security offered was land with value which land is routinely used by courts and financial institutions as sufficient security. Counsel argued that in as much as the purchase value for the land was UGX 80,000,000, the value of the land was more than enough to serve as security for costs in this matter.

Counsel subsequently prayed for Court to consider the land offered as security as adequate as the Court had the discretion to so judicially determine.

**DECISION OF COURT:**

In matters of Stay of Execution pending Appeal the High Court draws from inherent powers under Section 98 of the Civil Procedure Act in receiving an Application on Notice of Motion. The Applicant is expected to satisfy conditions as laid out in Order 43 Rule 4(3) of the Civil Procedure Rules to wit – proof of risk of substantial loss to the Applicant without the stay of execution; the application is made without unreasonable delay; and that security has been given by the applicant for due performance of the decree or order as ultimately binding upon him or her (see **Lawrence Musiitwa Kyazze v Eunice Businge – SCCA No. 18 of 1990**).

The Court of Appeal further expanded the conditions above in the case of **Kyambogo University v Prof. Isaiah Omolo Ndiege – CA Misc. Civil Application No. 341 of 2013** to include – serious or imminent threat of execution of the decree or order if the order is not granted resulting in the appeal being rendered nugatory; the appeal is not frivolous and has a likelihood of success; and that refusal to grant the stay would inflict more hardship than it would avoid.

The Supreme Court further held in **Former Employees of G4S Security Services v G4S Security Services Ltd – SCCA No. 18 of 2010** that where an unsuccessful party is exercising their unrestricted right of appeal, it is the duty of the court to make such order for staying proceedings in the judgment appealed as this will prevent the appeal from being rendered nugatory. By this holding there is clearly a requirement for there to be a pending appeal.

In this matter the 1st Respondent submitted that they did not substantially oppose the Application but only took issue with the sufficiency of the security offered by the Applicant. However for avoidance of any doubt, I shall nonetheless briefly cover the other grounds upon which the Application is based.

*Whether there is a Pending Appeal:*

As concerns the question of a substantive pending appeal there is evidence of Notice and part of the Memorandum of Appeal annexed to the Affidavit in Support of the Application vide **Babuge Trading Co. Ltd v Shaka Augustine and The Commissioner Land Registration – CACA No. 255 of 2024.**

*Whether the Application is Brought without Undue Delay:*

With regard to the filing of this Application it is also clear from the documents annexed to the Affidavit in Support of the Application that a Notice to Show Cause why Execution should Not Issue was received by the Applicant on 8th May 2024 while the Application was received on 15th May 2024. There was therefore no unreasonable delay.

*Whether the Appeal is not Frivolous and has a Likelihood of Success:*

As concerns the adequacy of the Application, the standard required is that the appeal is not frivolous and has a likelihood of success. In the case of **Junaco (T) Ltd & 2 Others v DFCU Bank Ltd – HCMA (Commercial Division) No. 0027 of 2023,** His Lordship Justice Stephen Mubiru outlined the parameters of establishing whether or not an appeal is frivolous and has a likelihood of success are as follows,

*“The court must be satisfied that the prospects of the appeal succeeding are not 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. There should be a sound, rational basis, founded on the facts and the law, and a measure of certainty justifying the conclusion that the appellate court will differ from the court whose judgment has been appealed against; that the appellate court could reasonably arrive at a conclusion different from that of the trial court.*

*The appeal will be considered frivolous if prima facie the grounds intended to be raised are without any reasonable basis in law or equity and cannot be supported by a good faith argument. If there is a strong showing that the appeal has no merit, that, is strong evidence that it was filed for delay or not in good faith. Additional evidence indicating a frivolous appeal is the applicant’s conduct of prior litigation which may show that the appeal is merely part of a series of suits, applications and appeals over the same subject matter in which the applicant has engaged with no success or no chance of success. The prior litigation or procedural history can be used to establish the lack of merit in the present appeal or the bad faith of the applicant in filing the present appeal.”*

By the holding above, the Court must be satisfied beyond mere possibility that the appeal has a realistic chance of success with sound rational grounds based on law and fact by which the appellate court is likely to reach a different conclusion from that of the trial court. The frivolousness of the matter can be deduced from grounds that are lacking any reasonable basis and are likely calculated to postpone or delay the implementation of the trial court decision. The frivolousness of the matter may also be deduced if the Applicant has a history of failed prior litigation over the same subject matter which is indicative of lack of merit or bad faith.

In the instant case as much as Counsel for the 1st Respondent submitted that they were not substantially opposed to the Application beyond the sufficiency of the security offered by the Applicant, the 1st Respondent stated in Paragraphs 7 and 8 of the Affidavit in Reply that the appeal was a waste of time as the Applicant had been previously defeated in prior matters before the Kasese Chief Magistrate Court vide **Shaka Augustine v Mr. Bigasaki – Civil Suit No. 021 of 2010; Babuge Trading Co. Ltd MC No. 12 of 2016 (Objector Proceedings);** and ultimately the High Court Civil Suit HCT-01-CV-LD-011 decision for which the Applicant is appealing to the Court of Appeal.

Having perused the decisions annexed by the 1st Respondent to the Affidavit in Reply, I found myself unable to make a determination about the chances of success of the appeal and whether it was not frivolous. This is because the Affidavit in Support of the Application sworn by Director Muhindo Jackson only had the first page of the Memorandum of Appeal annexed thereto. Without either a full draft Memorandum of Appeal or a copy of the full Memorandum of Appeal I could not reasonably infer whether the Court of Appeal would arrive at a conclusion different from that of the trial court. By the same token I could also not reasonably determine whether the grounds raised were yet another delaying tactic given the previous litigation over the same subject matter.

There being no sufficient basis for me to evaluate the prospects of success of the Appeal or the frivolity thereof I find that the Applicant has not proven that the Appeal has a likelihood of success and that it is not frivolous.

*Whether the Appeal will be rendered Nugatory:*

With regard to whether the Appeal will be rendered nugatory, among the Orders for which Execution is being sought is an Order for cancellation of a Certificate of Title for the Plaintiff company vide FRV HQT 250 Folio 2 Plot 117-119 Kilembe Road, Kasese Municipality and an Order for Costs. In the **Junaco (T) Ltd & 2 Others v DFCU Bank Ltd** decision cited above His Lordship Justice Mubiru held with regard to determining whether or not an appeal will be rendered nugatory without a Stay of Execution that it depends on whether or not what is sought to be stayed is irreversible if allowed to happen. He further added that it also depends on whether or not it can be adequately compensated in damages or whether or not it is in public interest to grant a stay.

In this matter Counsel for the Applicant argued that the cancellation of the Applicant’s title created a risk of the disposal of the suit property to a third party. However, in my view this risk can also be mitigated by the lodging of a caveat or even by way of damages. On the question of damages, Justice Mubiru held in the Junaco case that it is only in instances where the Respondent has been proven to be impecunious that damages may not be feasible. In this case I find that the Applicant did not adequately prove that the likely disposal of the suit land cannot be mitigated by lodging of caveat or even through damages. There is therefore no basis for concluding that the appeal will be rendered nugatory.

*Whether there is Risk of Substantial Loss to the Applicant:*

As concerns whether substantial loss will result if the stay is not granted, I rely once again on the holding of Justice Mubiru in the **Junaco** case where he cited with approval the decision in **Tropical Commodities Supplies Ltd & Others v International Credit Bank Ltd (in Liquidation)[2004] 2 EA 331)**. He held inter alia that beyond the ordinary loss to which every judgment debtor is subjected when they lose a case, an applicant must establish other factors that show that the execution will create a state of affairs that will irreparably affect or negate the very essential core of the applicant as the successful party in the appeal.

In this matter the Applicant did not lead any evidence as to suggest that execution would create the aforementioned state of affairs that will irreparably affect or negate the essential core of the Applicant in the event of a successful appeal.

*Security for Performance of Decree or Order:*

With regard to the question of security for costs in light of the Stay of Execution, the Applicant did put forward property comprised in LRV 3272 Folio 18, Plot 5 Bukonjo Block 34. The 1st Respondent disputed this as adequate security arguing that the purchase price of UGX 80,000,000 was not adequate proof of the value of the property which the 1st Respondent suggested had 3rd party interests. I am inclined to allow the security offered by the Applicant. This is because the Applicant annexed a copy of the Certificate of Title for the property in question and stated on oath that the purchase price was UGX 80,000,000. Counsel for the Appellant also pointed out that the taxed costs in the matter concluded before the High Court were less than the purchase value of the security offered.

In light of the above, the 1st Respondent could not dismiss the assertions of the Applicant on the sufficiency of the security without presenting evidence. The absence of the Lease Agreement relating to the property could be very easily accessed by way of a search in the Land Registry. Furthermore, any encumbrances on the land alluded to by the 1st Respondent are his duty to prove per Section 103 of the Evidence Act. The same would apply to the issue of the value of the security. Once the security is put forward by the Applicant it is for the 1st Respondent to prove to court that it is inadequate in terms of value. Arguing that there is no valuation report cannot be deemed an adequate basis to claim that the security is insufficient. At best it only calls into question the actual value but to prove that it is insufficient the one who alleges as much must lead evidence of that fact. I therefore find that on the face of it the security put forward by the Applicant for the Stay of Execution is adequate.

*Whether Refusal to Grant the Stay will Inflict more Hardship than it would Avoid:*

As concerns whether the refusal to grant the stay will inflict more hardship than it would avoid, Counsel for the Applicant argued that since the subject matter of the suit is land then both parties can wait. However, as rightly held by His Lordship Justice Mubiru in the **Junaco** case the Court has the duty to balance or weigh the scales of justice by ensuring the appeal is not rendered nugatory while at the same time ensuring that a successful party is not impeded from the enjoyment of the fruits of his or her judgment.

In this matter I find that in light of the fact that the Applicant has further options involving caveating the disputed property or even damages in the Appeal, the fears expressed by Counsel for the Applicant about the danger of the 1st Respondent moving out of the country is speculative and inadequate to demonstrate that the balance of hardship is higher for the Applicant.

In summary I find that while the Applicant has satisfactorily proved the fact that there is a pending appeal and that the Application is brought without undue delay, the other conditions precedent to the grant of a Stay of Execution have not been proved to the satisfaction of the Court. This Application is therefore dismissed.

**ORDERS:**

Costs in this matter shall be in the cause.

I so order.

**David S. L. Makumbi**

**JUDGE**

**28/10/24**