Ganafa v DFCU Bank Limited (Miscellaneous Application 6 of 2016) [2016] UGSC 38 (27 May 2016)

Full Case Text

# THE REPUBLIC OF UGANDA TN THE SUPREME COURT OF UGANDA AT KAMPALA MICS APPLICATION NO 06 OF 2016

# (ARTSTNG FROM MISC APPLICATION NO OOOS OF 20161 (ARISING FROM MISC APPL NO ()()64 OF 2016 OF COURT OF APPEAL) (ARTSING FROM CS NO 0465 OF 2Ol4 COMMERCTAL COURT DMSION)

(iN NN I'A PETI'R KISAWUZI ... APPLICANT VERSUS DIICU BANK I. I}/ITE[] .... RT'SPoNDENT

Coram: Faith Mvvondha JSC (Singlc Justicc)

### RULING OF COURT

This application was brought by way of Notice of Molion undcr Rules 2 (21,6 ('2]r b 42 and 50 of the Judicature (Suprcmc Court Rules) Directions Statutory Instrument No. 13 - 1 1.

lt sought for thc following orders:-

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(i) An intcrim Order of a temporary injunction and stay of cxccution against the Respondent, its agents and assignccs or persons acting for it or on its behalf stopping them from disposing off the applicants propcrty or executing any of the High Court and Court of Appeal Orders until the final disposal of the main application.

(ii) Costs of thc applicant be providcd for.

The application was supported by the grounds provided in the affidavit of the applicant but briefly thc grounds are that:

- (1)The applicant was dissatisl'ied with thc decision of the Court of Appeal and has commenced appeal process in this Court. - (2) The respondent has advertised the applicant's property for sale which rs the subject matter of the dispute and the sale is real and eminent. - (3) The applicant has filed a main application No.... of 2016 ( the number was not provided) for stay of execution and is pending hearing before this Cour t. - (4) That of the application is not granted the main application and the intended appeal and matters pending before the Court of Appeal will be rendered nugatory and the applicant u,ill suffer irreparable damage. - (5) That it is in the interest of justice and balance of convenience that this application is granted to preserve the status quo pending the hcaring of the main application.

The respondent liled an aflldavit in reply deponed by Alewa Apamaku opposing the application on the following grounds among othcrs:-

- (l) That Misc Application No 0064 of. 2016 was an interlocutory application, he attached photocopies of the application and the Order marked Dr and Dz. - (2) That the said notice of Appeal was incompetcnt - (3) That there's no appeal in law pending in this Court arising out of the purported noticc of Appeal.

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(4) That the applicant does not satisfy the legal requirement for the grant of the sought orders.

- (5) That the respondent does not seek to execute the decree of the High Court but exercising its power as a mortgagee over the property comprised in LRV 3808 Folio 20 Plot No. 665 Kyadondo Block 187 at Kasangati Wakiso to recover Ugshs238,936,686 executive of all costs which is outstanding to it. - (6) That the respondent is not aware of the purported Application No. 129 of 2016, has never been served with the same and was hearing of it for the first time in this application. - (7) That without prejudice to the foregoing the said Misc. Application No. 129 of 2016 is also incompetent. - (8) That the applicant has not complied with the provision of the Mortgage Regulations 2O\2 that govern such applications.

The Applicant filed a rejoinder and he deponed and stated among others as follows:-

- (i)That annexture Da attached to the affidavit in reply of the respondent (a Bank Statement of the applicant) was a forgery since in the lower Courts he asked for it in vain and could not be adduced in evidence on appeal level without leave of Court. etc. - (2) That when he confronted the principal borrower about his loan he told in that the debtwas asof 1/4/2016 Shs. 132,1O2,713/= and it could not be 229,096,708 in the same month. - (3) That the loan account which was exhibit P4, the disputed amount was extended to the borrowers without his knowledge and consent which the respondent is seeking to recover illegally.

### Background:-

Briefly the applicant was a plaintiff initially in a suit he instituted against the now respondent (DFCU Bank Ltd). The plaintiff had sued three persons in the

I{igh Court, the two defendants were withdrawn and it was only the current Respondent left. The suit proceed against the respondent (Defendant then). It was for declaration that the plaintiff was not liable for the loan sum that the defendant (Respondent) advanced to the two defendant's (borrowers) who were withdrawn late r from the suit in excess and after financing contract was executed without his knowledge and consent. In a nutshell the trial Court passed judgment in favour of the defendant (Respondent now). The applicant was not satisfied with the judgment and he filed an appeal in Court of Appeal vide Civil Appeal No. 54 of 2016 and hled an application for interim stay of execution and temporary injunction before the Court of Appeal.

The Court of Appeal heard the application for a temporary injunction, Counsel abandoned the application for interim stay and chose to argue the application for substantive stay of execution and temporary injunction together. The application was not granted to stop the intended sale. The applicant was dissatisfied with this order hence this application.

#### Representation:

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Mr. Katabarwa Herbert appeared for the Applicant and

Mr. Bakayana Isaac appeared foe the Respondent

#### Submissions:

Both Counsel made oral submissions. Counsel Katabarwa for the applicant submitted that the application was brought under rules 2(21 6(2ir(b1.,42 and 5O of the Judicature (Supreme Court Rules). He was seeking for an Interim Order <sup>69</sup> of a Temporary Injunction and Stay of Execution against the respondent, its agents and assignees or persons acting for it on it's behalf stopping them from disposing off the applicants property or executing any of the High Court and Court of Appeal Orders until the final disposal of the main application. He relied on the affidavit in support of the application deponed by the applicant Ganafa Peter Kisawuzi. He submitted that the law governing such application

was long stated overtime by this Court and has set conditions which has to exist before such an application can be granted. He said one of the conditions is that (a) there has be to pending or substantive application before this Court.

(b) there must be threat of execution

He said there is application No. 05 of 2016 of which this application is arising from.

He submitted that Annexture "C" is an advert by the respondent to sell the applicants properfy and that shows that there is eminent threat. He further argued that Annexture "B" to the application is a Notice of Appeal which was duly lodged and served to the respondent as per rule 72 of this Court ruies. He said a Notice of Appeal is as good as an appeal for purposes of this kind of application.

He relied on the authority ol Huang Sung Industrles Ltd. Vs TaJdin. Hussein & 2 Others Cinll Appeat No OO19 of 2OOB bcforc G. M. Okello JSC as hc then was said "For an application for an Intcrim Ordcr of Stay, it sufficc:s to show that a substantive application is pending and that there's a serious threat of exccution before the hearing of the pending substantive application. Hc also relied on Alcon Interrtatlonal Ltd Vs The Neu Vlslon Prlnting& Publlshlng Co. Ltd. Cttttt Appeal No, 04 of 2O1O. Which camc to thc same decision as the Hwang Sung Industries f,td supra. Also relicd on Charles Nganzl Vs Margaret Nangonga & Anor Clvtl Appeal No. 12 oi 2O1O Shiu. \* Constrttctlon Co. Ltd Vs Eudesh Enterprises Ltd Ctull Appllcatlon No, 32 oJ 1992.

He argued that the Court has inherent powers to grant the reliefs sought. He relied on the authority of Charles Nyanzi Supra where the Court granted an injunction as the subject matter was land and that once its alienated the loss is irreparable and cannot be atoned by any amount of damages. He said the execution is going to be on or around 29th and 30th of May 2016. He submitted that the application satisfied the Conditions/ Consideration required.

He attacked the respondents' affidavit in reply paragraphs 4 and 5 where it was stated that the Notice of Appeal and the Appeal were incompetent. He argued that a single Judge has no jurisdiction to go into issues of competence or incompetence. Rule 78 of this Court Rules provides for, how the same can be handled if one is aggrieved. There has to be a formal application for striking out an incompetent Notice of Appeal or Appeal and the Court has to be a full bench of Justices. To this end he said that all the authorities of the Respondent are of full bench and therefore they are not applicable in this matter.

He also submitted on paragraph 10 of the affidavit in reply in casc of nonc grant of application not suffcr irrc'parable Ioss n,hich cannot be atoned to in damages. Referring to the case of Shiv Construction Co Ltd Supra he argucd that it was held that the trial Judge was correct in ordering a temporary injunction against alienation because the property in dispute was land, land damages were usually not sufficient as compensation. That, that which meant that the respondents/ plaintiff would suffer irreparable injury if the injunction did not issue.

He further submitted that the respondent has not been able to comply with Regulation. l3(l) of the Mortgage Regulations 2012 because there were different amounts of money alleged to be due and so he was confused on what amount he would calculate the 30% on. He said in the affidavit in rejoinder in para. 6 that the loan account was Exhibit P4 and the dispute amount was Shs 12 I ,O00,000/ = as amount extended to the borrowers without his knowledge and consent which the respondent was seeking to recover illegally. In paragraph 5, the applicant stated among others that when he confronted the principal borrower about his ioan he told him that as at 7/412016 it was Shs132,102,713 and therefore it could not be shs.229,096,7081= in the same

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month. It was his submission that the applicant could not pay in accordance with regulation 13 (l) of the Mortgage Regulations. He prayed that the application be granted.

Counsel Bakayana for the Respondent opposed the application basing on the affidavit in reply by Elewa Apamaku.

He sated the following reason for opposing the same:-

(I)There have to be an appeal pending in this Court, which has an application for temporary injunction which demonstrates a prima facie case. He argued that paragraph 4, 5, and 9 of the affidavit are valid and this Court has jurisdiction. The notice of appeal is incompetent and so the applications that arise from it are all incompetent. He went further and referred to Article 132(21 ol the Constitution as amended which provides that an appeal shall lie to the Supreme Court from such decisions of the Court of Appeal as may be prescribed by law "and an appeal lies on final decision from Court of Appeal. He argued that S. 6 (l) of the Judicature Act confirms it. It provides "An appeal shall lie as of right to the Supreme Court where the Court of Appeal confirms, varies or reverses a Judgment or Order including an interlocutory Order given by the High Court in exercise of its original jurisdiction and either confirmed varied or reversed by the Court of Appeal.

## He relicd on thc authority of filon. Theodore Ssekikubo and 3 others Vs the Attorneg General & 4 others Supreme Court Constltutional Application No. 6 of 2013.

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He submitted that the points made were that the appeal was a creature of a statute and secondly from the final decision of the Court of Appeal which comes to the Supreme Court.

He argued that Annexture Dr and Dz of the respondent's affidavit in reply show the order sought. Annexture Dz is a consequence of Annexture Dr. That this was an interlocutory application. And it was dismissed.

It was after that, that the applicant filed a notice of appeal. He submitted that there's no prima facie case and there's no appeal in law. He prayed that the application be rejected on this ground alone, He continued to give reasons for opposing the application.

- (2) The applicant failed to comply with the Mortgage Regulations, regulation 13(l) as stated in paragraph 6, 1l and 12 of the Respondents aflidavit in reply. He argued that the Regulation requires the Mortgagee or any other intended party to deposit security of 30% of either the sale value or the outstanding amount. He attached a borrower's statement. He said the respondent offset 96,993 ,9951 = from the loan account but that didn't mean that the Bank is not entitled to recover interest. On the annexture, it showed that thc outstanding amount was Shs229,199,421 l= and the applicant had to pay 3Oo/o of that amount. Hc submitted that even if it was true that the applicant was confused on what amount to calculate the 3O%, at least from the applicants own documents i.e. the rejoinder. There was an admission of the outstanding amount being Shsl32m/= on Annexture R. - (3) The main application wherc this application arise from is incompetcnt for reasons given in ground I opposing the application. He also submitted {{, that from the applicant's affidavit in support of the application, the applicant knows that this application is incompetent. The applicant deponed in paragraph 6 as follows "I also have a pending appeal No. 54 of 2O15 before the Court of Appeal and Application No 129 of 2O16 for leave to appeal before Court of Appeal and the intended appeal before thls Court (Annexture Tl and T2f. Council argued that there's no law which permits that application to appeal on interlocutory matters.

He argued that this Court has powers of the Supreme Court under rule 3 (g) of this Court rules. Court means the Supreme Court of Uganda established under article 729 of the Constitution and includes any divisions of the Court and a single Judge exercising any power vested in his or her sitting alone. So he submitted that, there is no single time authorities of a full bench cannot be applicable in this Court.

He argued citing Dr. Ahqmed Mohamed Clnsuller Vs Greenland Bank (In ltqutdatton S;upreme Court Chil Appllcatlon No 7 of 2O16. He stated that this Court rejected the application for stay as incompetent. In this case the respondent was not seeking execution of the decree of the High Court as the applicants (plaintifl's case) was dismissed. He submitted that the respondent was exercising its powers as a mortgagee over the property aforementioned as deponed in the affidavit in reply paragraph 7. He prayed that the application be dismissed with costs.

Counsel Katabarwa made a short reply and among others he submitted that Annextures Tr & Tz were a notice of Appeal to appeal and Memorandum of appeal against the decision of the Court of Appeal. He cited rule 72 (4) of this \*3 Courts rules to support the above. He said that even if the leave was not there, this application can be filed and heard.

He retaliated his earlier prayers.

## Consideration of the Application:-

I have carefully considered both Counsel's submissions and read the affidavits and annextures for and against the application. It is trite law that the grant of an interim Order of Stay of Execution is a discretion of Court see (Rule 2 (21 of the Judicature Supreme Court Rules. It is also trite law that issuing <sup>a</sup> temporary injunction is equally discretionary and it is premised on, only where

th,3re is a pending suit before the appropriate Court where the suit has not be,sn disposed of. It is governed by Or 4l (l) of the Civil Procedure Rules which provides among others as follows:-

"where in any suit it's proved by aflidavit or otherrorise.

(af That any property in dispute in a suit is in danger or being wasted damaged or alienated by any party to the suit or wrongfully sold in execution of a decree or that the defendant threatens or intends to remove or dispose of his or her property with a view to defraud his or her creditors, the Count may by Order grant a temporary injunction to restrain such act, or make such other order for the purpose of staying and preventing the wasting, damaging, alienation, sale, removal or disposition of the property as the Court thinks I-rt or until the disposal of the suit or until further order"

In the casc of Robert Kavuma Vs Hotel International Supreme Court Civil Appr:al No 8 of 1996 it n'as he ld,

"It is generally accepted that a temporary injunction to issue the Court must be satisfied,

l. That the applicant has a prima facie case with a probability of success.

2, That the applicant might otherwise suffer irreparable damage which would not be adequately compensated for in damages.

3. If the Court is in doubt on the above (2) points, that the Court will decide the application on a balance of convenience. In other words, whether the inconveniences which are likely to issue from withholding the injunction would be greater than those which are likely to arise from granting it."

Rule6(2f (bf of this Court Rules provides "subject to sub rule (Il of this Rule the institution of an appeal shall not operate to suspend any sentence or to stay execution but the Court may.

(bf In any civil proceedings where notice of Appeal has been lodged in accordance with rrrle, 72 of these rules Order a stay of execution, an injunction or stay of proceedings as the Court may consider just."

Cournsel for the applicant relied on the case or Hwang Sung Industries Ltd supra, Alcon International Ltd supra and he casually summarised the gist reacting out the following, "for an application for an Interim Order of stay, it suff.ces to show that a substantive application is pending and that there's serious threat of execution before the hearing of the pending substantive application. It's not necessary to pre-empt consideration of matters necessary in dt:ciding whether or not to grant a substantive application for stay."

Arising from that submission the issue which arise are:

(l ) Whether there is a pending substantive application in this Court for an Order of interim temporary injunction and stay of execution. \*5

(2) Whether there is notice of Appeal lodged in accordance with rule 72 of the rules of this Court.

(3) Whether there is eminent threat to property in issue

In tht: Hwang Sung Industries Ltd case and indeed in Alcon International Ltd Supra., it was the Courts holding that "Lodgment of the Notice of Appeal in accor<lance with rule 72 ensures the competence of the pending substantive application."

It is this Courts duty to examine the evidence to ensure and satisfy itself of the pendency of the substantive application. Rule 72 provides (If any

pe:rson who desires to appeal to the Court shall give notice in writing. Whrich shall be lodged in duplicate with the Registrar of the Court of Apoeal. (2) every notice under sub rule (I) of this rule shall subject to rules 8O & 91 of these rules be lodged within 14 days after the date of the decision against which it is desired to appeal......... "

The evidence adduced by the affidavit of the applicant shows that he lodged the not;ce of Appeal in this Court on 210512016. But there was no evidence of pending substantive application apart from the mention of filing Appiication No 129 of 2016, which averment was challenged by the aflidavit in reply of the Respondent and the challenge was not rebutted affidavit in rejoinder.

He deponed in paragraph 6 of the affidavit in support of the Applicatron as follows:- That I also have a pending appeal No. 54 of 2016 before the Court of Appeal and Application No 129 of 2016 for leave to appeal before the Court of Appr:al and the intended appeal before this Court. He attached the photocopy of the Memorandum of Appeal to Court of Appeal and Notice of Motion for leave to ap,peal marked Tr and T2 respectively.

I have perused the documents Tl and Tz and its apparent that even the leave to apperrl to this Court had not been granted or had been refused by the Court of J! AppeL as required by Rule a1 (2) (a) & (b) of this Court rules which governs Appli,:ations of this nature.

There was no evidence led by the applicant to satisfy Court that there was emin('nt danger to the property. There is no evidence that an application for execution of either the High Court judgment or Court of Appeal was done. There is no decree which was extracted for execution and filed in this Court. The Applicant only stated in the affidavit that the respondent had advertised his pr,rperty which was the subject matter of the appeal for sale. He attached uanne)<ture 'C"'the photocopy of the advert. This annexture of Saturday 306 April 12O16 page 4l does not show in what Newspaper the advert was. In response to this the respondents denied execution process and stated in the

. affidavit in reply that, the respondent was exercising its powers as a mortgagee ,.ovr:r the property to recover Ugandan Shs.238,936,636/= sx.1r.ive of all costs which is outstanding to it. He also attached the photocopy advert which showed that it was in Monitor News Paper. The copy of the statement was attrrched. The respondent also denied having knowledge of the purported aptrrlication No. 129 of 2016 as it has never been served on him. The respondent stated that he just heard about it at the hearing of this application. As said earlier this fact was not rebutted.

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The respondent in the affidavit in reply deponed by Alewa Apamaku stated in paragraph 1I that the applicant does not satisfy the requirements for grant of the Orders sought and in paragraph 12 he stated that the applicant has not complied with the provisions of the Mortgage Regulations 2O I 2 that govern matters such as this.

The Notice of Appeal shows that it was filed in this Court in accordance with Rule 72 of this Court rules but without evidence to show that rules 4l of this Court rules was complied with after filing the Notice, the Notice of Appeal canrot be valid, it out rightly becomes incompete nt. This was an interlocutory matter which was governed by rule 41 of this Court Rules. I am unable to accept the submission of Counsel for the applicant, that once a Notice of Appeal is filed, incompetent as it may be, this Court can just grant the orders ,{ souglrt." This Court in the case of La.wrence Musltuq, Kgazze Vs Eunlce Buslngge SCC. A lVo. la of 1990 gave guidance in matters concerning the above' provision of giving leave in particular instances, among others their Lordships stated that:

"However, there may be circumstances which this Court will intenrene to preserve the status quo. In cases where the High Court has doubted jurisdiction or has made some error of law or fact apparent on the face of the record which is probably wrong or has been unable to deal with the application in good

time to the prejudice of the parties in the suit property, the application may be made direct to this court...." (sic)

It has to be noted that this is only in respect of applying for leave to appeal to the Supreme Court. The instant case is not an application for leave to appeal to this Court, it's the actual application seeking interim orders. So the provisions of Rule 41 of Supreme Court Rules are not applicable to this application.

Counsel for the respondent cited the case of Dr. Kasirivu Atwoki and 3 Others Vs Grace Bamurangye & 3 Ohers Supreme Court Civil Application No. 2 of 2010, Dr. Ahamed Mohamed Kisuule Vs Greenland Bank Supra. To support the objection to the grant of the Orders sought I found these authorities not on the issue of interim Orders but rather on substantive matters so could not be material to this application. Counsel for the applicant submitted that this Court has no jurisdiction to declare a Notice of Appeal incompetent basing on the affidavit of the Respondent. I find this argument misconceived. Rule 3 (g) of the Supreme Court Rules is very clear it provides; Court means the Supreme Court of Uganda established under Article 129 of the Constitution and includes any division of Court and single judge exercising any power vested in him or her sitting alone. Also Judicature Act S. 8 is more instructive it provides:-

1. A single Justice of the Supreme Court may exercise any power vested in the Supreme Court in any interlocutory cause or matter before the Supreme Court.

2. Any person dissatisfied with the decision of a single Justice in the exercise of a power under sub section (I) is entitled to have the matter determined by a bench of three Justices of the Supreme Court which may confirm, vary or reverse the decision.

The provision is clear needs no explanation.

- This Court is not satisfied that the legal requirements as stated in this ruling ' were fulfilled by the applicant. There was no evidence that the applicant made an application for leave to appeal in the Court of Appeal whether informally or oth.erwise and was refused. It was clear that the applicant has no automatic right of appeal so it follows that the Notice of Appeal could not be competent. This Court cannot over look that fact there was no evidence that a substantive apprlication was pending in the Court there was no evidence that there was eminent threat to the property. Since there was no pending substantive application before this Court, there is no way this Court can be satisfied that the applicant had a prima facie case to warrant the grant of Interim Order of injunction and so the other two conditions of irreparable damage to be suff,:red and balance of convenience don't arise. As a result this Court declines to grant the Orders sought. The application is dismissed with costs.

rL Datc'd at Kampala tr,i" L.l.llary oI May, 2016.

Ilon. Lady Justicc Faith Mwondha JUSI'ICE SUPREME COURT /

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