Bavima Steel Limited v Muscle Construction Limited & Another (Miscellaneous Appeal 26 of 2024) [2024] UGCommC 245 (12 August 2024)

Full Case Text

#### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION)

# **MISCELLANEOUS APPEAL NO. 0026 OF 2024** (ARISING FROM MISCELLANEOUS APPLICATION NO. 1274 OF 2024) (ARISING FROM MISCELLANEOUS APPLICATION NO. 1256 OF 2024) **(ARISING FROM EMA NO. 0233 OF 2023)** (ALL ARISING FROM CIVIL SUIT NO. 0233 OF 2021)

BAVIMA STEEL LTD :::::::::::::::::::::::::::::::::: **VERSUS**

1. MUSCLE CONSTRUCTION LTD 2. MUSCLE GROUP LTD :::::::::::::::::::::::::::::::::::

#### (Before: Hon. Justice Patricia Mutesi)

#### **RULING**

#### **Background**

The Appellant brought this appeal by notice of motion under Section 33 of the Judicature Act. Sections 79 and 98 of the Civil Procedure Act and Order 50 Rule 8 of the Civil Procedure Rules seeking orders that:

- 1. The ruling and orders of the Learned Deputy Registrar in Misc. Application No. $1274$ of 2024 be set aside. - 2. Costs of this appeal be provided for.

Briefly, the grounds of this appeal are that:

- 1. The Learned Deputy Registrar of this Court erred when he did not exercise his discretion judiciously and, instead, exercised the same with bias. - 2. The Learned Deputy Registrar of this Court erred when he granted a stav of execution on a warrant issued by the Court on 27th May 2024 whilst the application sought to stay a warrant issued on the 24th May 2024 (a nonexistent warrant).

- 3. The Appellant has been denied the fruits of her judgment in HCCS No. 0233 of 2021 ("the main suit") and has been put to prejudice. - 4. The Learned Deputy Registrar of this Court erred in law and fact when he failed to evaluate the evidence adduced and ruled that the 1st Respondent had sufficiently adduced evidence to prove that it was a separate entity in law whilst ignoring the Appellant's evidence that the goods were in its possession. - 5. The Learned Deputy Registrar of this Court erred in law when he failed to apply the law and established principles on the grant of an order for stay of execution, having glaringly overlooked them and resorted to issues of corporate personality. - 6. The attached goods comprise of 533 bags of cement, among others, which by their very nature, if allowed to continue to be stored and not sold, shall deteriorate, be wasted and, or, lose value. - 7. Justice requires that the ruling and orders in Misc. Application No. 1274 of 2024 by the Learned Deputy Registrar of this Court be overturned and set aside so that the execution process continues.

The appeal is supported by the affidavit of the Appellant's Sales Manager, Mr. Sharma Kaushal. Mr. Kaushal told the Court that the 1st Respondent filed Misc. Application No. 1256 of 2024 objecting to the execution of the decree in the main suit. The 1st Respondent further filed Misc. Application No. 1274 of 2024 seeking orders of stay of execution of the decree in the main suit pending the disposal of the said objector application. The 1st Respondent's case was that it was not party to the main suit yet the goods attached belonged to it and not to Muscle Group Ltd (the judgment debtor). It was contended that the $1st$ and $2nd$ Respondents are separate legal entities and that the judgment debt could only be recovered from the $2^{nd}$ Respondent.

Mr. Kaushal stated that, in reply, the Appellant disputed the truthfulness of the claims in the said application. It was made clear that the suit goods were in the Appellant's possession and that the objection to the attachment and sale was in bad faith. He also stated that during the hearing of Misc. Application No. 1274 of 2024, the 1st Respondent did not clarify what its relationship with the 2nd Respondent is yet they allegedly operate in the same premises. In his ruling, the Learned Deputy Registrar of the Court allowed the application and issued an order staying execution until the determination of the objector application vide Misc. Application No. 1256 of 2024. Mr. Kaushal finally told Court that since the attached goods comprise of 533 bags of cement, among others, they are likely to deteriorate or expire if they are not sold off soon.

The appeal is also supported by an affidavit affirmed by Mr. Kyagulanyi Kassim, the Court Bailiff appointed to execute the warrant in EMA No. 0233 of 2023. Mr. Kyagulanyi told the Court that, by an order of this Court in the main suit, the 2nd Respondent is liable to pay the Appellant UGX 236,884,609 which sum remains outstanding to this day. On 27th May 2024, he was given a warrant by this Court to attach, impound and sell moveable property (stock in the 2nd Respondent's hardware). On 27th June, 2024, the goods were successfully impounded with Police approval.

Mr. Kyagulanyi further stated that he is aware that the $1^{st}$ Respondent made an application for stay of execution vide Misc. Application No. 1274 of 2024 that was granted by the Learned Deputy Registrar of the Court, thereby halting the sale of the attached goods by a warrant dated 27th May 2024 yet the warrant sought to be stayed in the said application was different. Among the goods attached were 533 bags of cement which, by their nature, will deteriorate, be wasted and / or lose value if not sold off soon. The 2nd Respondent has no other tangible asset and/ or property that would be attached in execution of the decree in the main suit and, as such, the orders in Misc. Application No. 1274 of 2024 should be set aside to avoid losses to the Appellant.

The 1st Respondent opposed the appeal through an affidavit in reply sworn by Ms. Medrine Mbekeka, one of its directors. Ms. Mbekeka stated that before fixing this appeal for hearing, the Appellant filed Misc. Application No. 1403 of 2024 seeking leave to appeal against the ruling in Misc. Application No. 1274 of 2024. The Appellant proceeded *ex parte* in Misc. Application No. 1403 of 2024 and when the same came up for hearing on 17th July 2024, it was dismissed. She contended that this appeal is incompetent as the Appellant did not obtain leave to appeal before filing the same.

Ms. Mbekeka further stated that the Learned Deputy Registrar relied on all the pleadings and materials on record while deciding Misc. Application No. 1274 of 2024. She stated that Mr. Kaushal was not present during the attachment and that Mr. Kyagulanyi took more goods than those permitted by the warrant. She

stated that the 1st Respondent already took some steps to have the objector application fixed for hearing. Initially, that application had also been fixed for 12th July 2024 but the Learned Deputy Registrar advised both parties that he was forwarding the file to the trial Judge, after hearing Misc. Application No. 1274 of 2024. Ms. Mbekeka conceded that it was premature for the Learned Deputy Registrar to resolve issues which are a preserve of the objector application.

The 2nd Respondent did not file an affidavit in reply to the appeal.

The Appellant filed an affidavit in rejoinder to the 1st Respondent's affidavit in reply which was still affirmed by Mr. Sharma Kaushal. Mr. Kaushal clarified that Misc. Application No. 1403 of 2024 was never heard due to administrative issues and that the Judge it had been assigned to advised the Appellant to file another application. The Appellant then filed Misc. Application No. 1428 of 2024 and secured a certificate of urgency for the hearing of this appeal during the court vacation. Mr. Kaushal maintained that persons aggrieved by orders of registrars in interlocutory applications do not need leave to appeal such orders to a judge.

### **Issues arising**

1. Whether this appeal is competent.

2. Whether the ruling and orders of the Learned Deputy Registrar of this Court in Misc. Application No. 1274 of 2024 should be set aside.

# **Representation and hearing**

At the hearing, the Appellant was represented by Ms. Sharon Tem of M/S Tem Advocates. The 1st Respondent was represented by Mr. Bwesigye Enock of M/S Factum Associated Advocates but the 2nd Respondent did not appear. Counsel argued the appeal orally. I have carefully considered the submissions made, the authorities cited and all the other materials on the record in deciding this appeal.

# Determination of the issues

# Issue 1: Whether this appeal is competent.

The 1st Respondent contended that this appeal is incompetent as a result of the Appellant's omission to obtain leave from the Court before filing the appeal. It was argued that since the Appellant had earlier filed Misc. Application No. 1403 of 2024 (seeking for leave to appeal the ruling and orders in Misc. Application

No. 1274 of 2024, among other orders) which was dismissed, the Appellant did not have the right to file this appeal. In reply, the Appellant contended that it has a right to appeal any and all orders of a registrar in an interlocutory application such as the orders in Misc. Application No. 1274 of 2024.

It is trite law that the right to appeal is a creature of statute. (See Baku Raphael Obudra & Anor V Attorney General, SC Constitutional Appeal No. 1 of 2005). A person who is aggrieved by a decision of a registrar has a right to appeal against that decision to a judge. This is set out is **Section 79(1)(b)** of the Civil Procedure Act which provides that such an appeal ought to be filed within 7 (seven) days from the date of the order of the registrar sought to be overturned. This position is reaffirmed by **Order 50 Rule 8** of the Civil Procedure Rules.

It is only necessary for a party to obtain leave to appeal when there is no right of appeal expressly set out in statute. Where there is an express provision of a statute prescribing one's right to appeal, seeking leave to appeal is rendered superfluous. Since this appeal arises from the orders of the Learned Deputy Registrar of this Court in Misc. Application No. 1274 of 2024, the Appellant did not have to first obtain leave to appeal from the Court before filing the appeal pursuant to Section 79(1)(b) of the Civil Procedure Act and Order 50 Rule 8 of the Civil Procedure Rules. For that reason, the 1st Respondent's contention that this appeal is incompetent does not have any merit and I, accordingly, find that this appeal is competent.

# Issue 2: Whether the ruling and orders of the Learned Deputy Registrar of the Court in Misc. Application No. 1274 of 2024 should be set aside.

The gist of the Appellant's case is that the Learned Deputy Registrar of the Court failed to exercise his discretion judiciously while dealing with Misc. Application No. 1274 of 2024. Counsel for the Appellant told Court that some of the attached goods (the 533 bags of cement) are, by their nature, vulnerable to deterioration and wastage. For that reason, the cement is likely to deteriorate if it is not sold off soon. In reply, Counsel for the 1st Respondent supported the findings and orders of the Learned Deputy Registrar. He argued that the principles governing stay of execution had been properly applied to the facts in Misc. Application No. 1274 of 2024 and that the Court had rightly stayed execution of the decree.

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In analysing this appeal, I have found it necessary to first examine whether the Learned Deputy Registrar of the Court had the jurisdiction, in the first place, to hear and determine Misc. Application No. 1274 of 2024. This question, though not exhaustively traversed by counsel at the hearing, is key in analysing the legality of the orders in Misc. Application No. 1274 of 2024 as it precedes any and all other issues and concerns arising therefrom.

Jurisdiction is the power of court to entertain, hear and determine an action or proceedings. Jurisdiction is not a matter of inference or attractive reasoning. It is a matter of law. The power of a court to entertain, hear and determine an action must be expressly prescribed by law before that court can proceed with that action. Proceedings of a court without jurisdiction are a nullity since lack of jurisdiction goes to the root of the legality of the court's decision. (See Desai V Warsama (1967) EA 351).

The powers of registrars are aptly set out under Order 50 of the Civil Procedure Rules. These powers include the power to enter consent judgments, the power to determine interlocutory applications and the power to execute decrees and warrants, among others. There are now several decisions of this Court, the Court of Appeal and the Supreme Court interpreting Order 50 of the Civil Procedure Rules and delineating the bounds of the powers of registrars.

For instance in Florence Dawaru V Angumale Albino & Anor, HC Misc. Civil Application No. 0096 of 2016, for example, this Court explained that under Order 50 of the Civil Procedure Rules, registrars exercise auxiliary jurisdiction which enables them to deal with those matters expressly prescribed by Order 50 of the Civil Procedure Rules and exercise powers ancillary or incidental thereto. The Court also clarified that the "incidental" powers of a registrar are those powers that are directly and immediately appropriate to the execution of the powers expressly granted and which exist only to enable the Registrar carry out the purporse for which the auxiliary jurisdiction was conferred.

In Bunyoro Kitara Reparations Agency Ltd V Kibaale District Land Board & 6 Ors, Civil Appeal No. 0011 of 2022, this Court dealt with an appeal similar to the present one. In that appeal, the Learned Assistant Registrar of this Court at Masindi at the time had heard and dismissed applications for interim stay of execution and substantive stay of execution in the same case. The Court was called upon to determine whether the Learned Assistant Registrar had had the

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$\frac{N}{2} \cdot \frac{1}{\Phi_{\rm S}} = -\alpha \qquad \qquad \text{and} \qquad$ jurisdiction to entertain the applications. The Court found that the Assistant Registrar had not had the jurisdiction to decide the application for a substantive stay of execution as such a power was not incidental to the powers of a registrar in Order 50 of the Civil Procedure Rules.

I am also alive to the decision in Kaggwa Michael V Apire John, Misc. Application No. 1 of 2023 in which this Court comprehensively traversed its jurisdiction to handle applications for substantive stay of execution. In that case, the Learned Deputy Registrar of this Court at Gulu had issued an order staying execution of a decree pending the disposal of an appeal against the same decree in the Court of Appeal. It was argued that the Learned Deputy Registrar had not had the jurisdiction to issue that order. The Court had this to say:

"... I find it improper for a Registrar High Court to grant substantive stay of a decree or order of a Judge, pending an intended appeal to the Court of Appeal. I hold that no such powers are available to a Registrar or Deputy Registrar or Assistant Registrar, High Court, under 0.50 of the CPR. A substantive stay of execution is not an interlocutory matter pending in the High Court that a Registrar, Deputy Registrar or Assistant *Registrar can exercise jurisdiction over. A substantive stay application is* not anywhere governed by O.50 CPR, but by Section 98 of the CPA." Emphasis mine.

The Court further clarified that the power to grant substantive stay of execution of a decree or order of the High Court is only vested in the High Court Judge pursuant to Section 98 of the Civil Procedure Act.

I now turn to the facts of the instant appeal. As earlier stated, this appeal arises from the orders of the Learned Deputy Registrar of the Court in Misc. Application No. 1274 of 2024. According to the Notice of motion in Misc. Application No. 1274 of 2024, the 1st Respondent (Applicant therein) sought orders that:

"1. An order of stay of execution of the decree in civil suit number 233 of 2021 issues pending the hearing and disposal of the application for objector vide miscellaneous application number 1256 of 2024;

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2. That costs of this application be provided for." Emphasis mine.

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Misc. Application No. 1274 of 2024 was brought under Article 28(1) and 44(c) of the Constitution of the Republic of Uganda, 1995 (as amended), Section 98 of the Civil Procedure Act, and Order 52 Rules 1 and 3 of the Civil Procedure Rules. It has been held that there is no specific statutory provision allowing the High Court to stay execution of its decrees and orders pending appeal to the Court of Appeal. (See Mugenyi & Co. Advocates V National Insurance Corporation, SCCA No. 13 of 1984). Since the High Court has inherent powers under Section 98 of the Civil Procedure Act to ensure that the ends of justice are not defeated. it can stay its own decrees and orders under that provision in all appropriate cases.

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I have also not found any specific provision or procedure for the High Court to stay execution of its decrees and/ or orders pending the hearing and disposal of objector applications before it. It is my considered view that, since the High Court has inherent powers under Section 33 of the Judicature Act and Section 98 of the Civil Procedure Act to ensure that the ends of justice are not defeated, it can similarly stay its decrees and orders in all appropriate cases pending the disposal of objector proceedings.

What remains to be determined is whether a registrar can exercise the powers to stay execution pending the disposal of objector proceedings or whether those powers can only be exercised by the Judge. I am convinced that the answer to this question wholly rests on whether or not the order sought is an interim stay of execution order or a substantive stay of execution order. By allusion to the decision in Kaggwa Michael V Apire John (supra), I am of the firm view that a registrar is empowered to handle an application for an interim order of stay of execution pending the final disposal of objector proceedings but an application for a substantive order of stay of execution pending the final disposal of objector proceedings can only be handled by the Judge.

In the instant case, it is not obvious, at least on the face of the Notice of Motion in Misc. Application No. 1274 of 2024, whether the 1st Respondent (Applicant therein) sought an interim order of stay of execution or a substantive order of stay of execution. As can be seen from the orders sought which I have already reproduced above, the 1st Respondent simply applied for an order of stay of execution. Nevertheless, the last part of the order sought clarifies that the order sought was meant to stay execution of the decree in Civil Suit No. 0233 of 2021 until the determination of the objector application vide Misc. Application No.

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1256 of 2024. Indeed, the order later issued by the Learned Deputy Registrar stayed the sale of the impounded goods until the disposal of the said objector application.

In principle, an order for an interim stay of execution would halt execution until the hearing and disposal of the application for the substantive stay of execution. On the other hand, an order for a substantive stay of execution would halt execution until the disposal of the substantive dispute over the legality or propriety of the decree, order or warrant sought to be executed. As such, notwithstanding the nomenclature, an order that halts execution until the disposal of an application for a substantive stay of execution is an interim order of stay of execution while an order that halts execution until the disposal of a substantive dispute over the legality or propriety of the decree, order or warrant sought to be executed is a substantive order of stay of execution.

In spite of the fact that the order sought and issued in Misc. Application No. 1274 of 2024 was not expressly said to be an interim or substantive order of stay of execution, it halted execution until the disposal of the substantive dispute over the legality and propriety of the warrant of attachment and sale issued in EMA No. 0233 of 2023 to enforce the decree in Civil Suit No. 0233 of 2021 vide the objector proceedings in Misc. Application No. 1256 of 2024. It is, therefore very clear to me that the said order was, in law, a substantive order of stay of execution and not an interim order of stay of execution since it stopped any further execution until the trial Judge makes a final decision on the legality of the warrant issued in execution.

Counsel for the 1st Respondent, in dealing with the question of jurisdiction at the hearing, submitted that under Order 22 Rule 23 of the Civil Procedure Rules, the Court handling objector proceedings can stay execution. He argued that since the decree in the main suit had been sent to the Learned Deputy Registrar for execution, and the Learned Deputy Registrar is a court for that purpose pursuant to Order 50 Rules 4 and 6 of the Civil Procedure Rules, he was right to handle the application for stay of execution and refer the objector application to the trial Judge.

I find these arguments to be msicoonceived for two reasons. First, they contain an obvious disharmony. Whereas counsel for the 1st Respondent argued that the Court handling objector proceedings can stay execution, he also conceded that

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the Learned Deputy Registrar is not the one handling the objector proceedings. If the Court handling the objector proceedings is empowered to stay execution pending the determination of those proceedings, the stay of execution application in this case then ought to have been heard by the trial Judge who is the one to whom the objector application was sent for hearing and determination. By the same logic of counsel for the 1st Respondent, since it was not the Learned Deputy Registrar who was to handle the objector application, he should not have entertained the stay of execution application.

Secondly, I reiterate the position of the law that applications for substantive stay of execution are outside the purview of Order 50 of the Civil Procedure Rules. Instead, they are handled pursuant to Section 98 of the Civil Procedure Act. Substantive stay of execution applications are not within the calibre of matters within the powers of registrars anticipated under Order 50 of the Civil Procedure Rules. Thus, notwithstanding a registrar's powers to issue execution in Order 50 Rule 4 of the Civil Procedure Rules, he or she cannot stay that execution, save when he or she does so in the interim pending the hearing and disposal of an application for a substantive stay of execution order by the Judge.

Accordingly, in the Civil Procedure Rules, Order 22 Rule 23 cannot be interpreted in isolation of Order 50. The proper construction to be ascribed to the two is that although decrees of the High Court are sent to registrars for execution, registrars are only empowered to stay execution in the interim pending the hearing and disposal of an application for a substantive stay of execution order by the Judge.

Accordingly, I am satisfied that the Learned Deputy Registrar did not have the jurisdiction to entertain and decide Misc. Application No. 1274 of 2024 which, in effect, sought a substantive order of stay of execution pending determination of the legality of the warrant vide the objector proceedings in Misc. Application No. 1256 of 2024. I reiterate that a decision made by a court without jurisdiction is a nullity *ab initio* and cannot stand.

In view of these findings, it is unnecessary for me to delve into the merits of the appeal. Consequently, the appeal succeeds and I make the following orders:

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This appeal is allowed. i.

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- The orders of the Learned Deputy Registrar in Misc. Application No. ii. 1274 of 2024 are set aside. - Costs of this appeal shall abide by the outcome of Misc. Application iii. No. 1256 of 2024.

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$\overline{\mathbb{E}}$ $\frac{2}{2\pi}$ $\frac{2}{\pi}$ $\frac{2}{\pi}$ $\frac{2}{\pi}$ $\frac{2}{\pi}$ **Patricia Mutesi** $\frac{d}{dt} \, \hat{u}^{(1)} = \frac{d}{dt} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{2}} \, \hat{u}_{\frac{1}{$ JUDGE $(12/08/2024)$

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