GHC Recycling Limited v Kateeba & 2 Others (Miscellaneous Application 645 of 2024) [2024] UGCommC 102 (3 May 2024)

Full Case Text

### THE REPUBLIC OF UGANDA

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

# **MISCELLANEOUS APPLICATION NO. 0645 OF 2024** ARISING FROM EMA NO. 131 OF 2024 ALL ARISING FROM CIVIL SUIT NO. 0462 OF 2020

GHC RECYCLING LTD ::::::::::::::::::::::::::::::::::: **VERSUS**

<table>

PETUA KATEEBA ::::::::::::::::::::::::::::::::::: JUDGMENT CREDITOR

#### AND

#### 1. HAKAN TURKMEN

2. GREEN AFRICA RECYCLING LTD ::::::::::::::::::::::::::::::::::: JUDGMENT DEBTORS

(Before: Hon. Justice Patricia Mutesi)

#### **RULING**

#### **Background**

This application is brought by notice of motion under **Sections 14** and **33** of the Judicature Act Cap 13, Section 98 of the Civil Procedure Act Cap 71 and Order 22 rules 55, 56 & 57 and Order 52 rules 1, 2 & 3 of the Civil Procedure Rules S. I. **71-1** seeking:

- 1. A declaration that the Applicant's property namely; PET bottle crushing line comprising of; a blue crusher, a sorting conveyor, 2 pieces of blue squeezers, a high speed loading flex fan, a delivery cyclone, a PET flex dryer and a label remover are not liable to attachment and, or, execution. - 2. An order that the Applicant's property namely; PET bottle crushing line comprising of; a blue crusher, a sorting conveyor, 2 pieces of blue squeezers, a high speed loading flex fan, a delivery cyclone, a PET flex dryer and a label remover be exempted and released from attachment. - 3. Costs of this application.

Briefly, the grounds of this application are that:

- 1. On the $4^{th}$ April 2024, the $1^{st}$ Respondent applied for execution and sale of machinery at the warehouse in Kyambogo, including the PET bottle crushing line belonging to the Applicant. - 2. The Applicant claims interest in the PET bottle crushing line that is part of the machinery which is the subject of attachment. - 3. The Applicant is the legal owner of the PET bottle crushing line and only leased the same to the 3rd Respondent on 1st August 2019. - 4. There is a high likelihood that the PET bottle crushing line will be sold in execution by the 1st Respondent to the detriment of the Applicant. - 5. The $2^{nd}$ and $3^{rd}$ Respondents have no interest whatsoever, whether legal or equitable, in the PET bottle crushing line. - 6. The Applicant will suffer irreparable loss if its PET bottle crushing line is not released from attachment. - 7. It is just and equitable that the PET bottle crushing line be released and, or, exempted from attachment or execution.

The application is supported by the affidavit of Boaz Nkoko who said that he is the Group Manager of the Applicant. Therein he stated that on 4th April 2024, the 1st Respondent applied for execution and sale of machinery at the Kyambogo warehouse vide EMA No. 0131 of 2024 arising from Civil Suit No. 0462 of 2020. Part of that machinery is a PET bottle crushing line comprising of; a blue crusher, a sorting conveyor, 2 pieces of blue squeezers, a high speed loading flex fan, a delivery cyclone, a PET flex dryer and a label remover. Mr. Nkoko stated that the Applicant is the legal owner of the PET bottle crushing line and only leased the same to the $3^{rd}$ Respondent on $1^{st}$ August 2019.

Mr. Nkoko further stated that there is a high likelihood that the said PET bottle crushing line will be sold in execution by the 1st Respondent to the detriment of the Applicant. He concluded that that the 2nd and 3rd Respondents have no interest at all, whether legal or equitable, in the said PET bottle crushing line and that the Applicant will suffer injustice and irreparable loss if the same is not released from attachment.

The 1st Respondent filed an affidavit in reply opposing the application. Therein she stated that a perusal of the documents relied on by the Applicant does not reveal that the machines sought to be sold in execution belong to them or exist

at all. She stated that the lease/rent contract for the PET bottling crushing line does not refer to those machines specifically. She added that that the said contract is not authentic. She further staated that the machinery sought to be released from attachment is in her warehouse in Kyambogo implying that the Applicant is not in possession of that machinery. She reminded the Court that she obtained the order attaching all the machines in the warehouse before Judgment in Civil Suit No. 0462 of 2020 in 2020. Since then, the Applicant had never come forward to Court to claim the machines and ought to be deemed to have acquiesced to the attachment.

The 2nd Respondent filed an affidavit in reply to the Application sworn by Kanzira Moses who stated that he is the lawful Attorney of the 2nd Respondent. Mr. Kanzira stated sthat the Applicant leased the PET bottle crushing line to the 3rd Respondent on 1st August 2019. He also stated that the 2nd Respondent does not object to this application and verifies that, indeed, the Applicant is the legal owner of the PET bottle crushing line. The 3rd Respondent filed an affidavit in reply sworn by its General Manager, Ssekanjako Godfrey Kyaterekera. He also confirmed that the Applicant leased the PET bottle crushing line to the 3rd Respondent on 1st August 2019 and that the 3rd Respondent does not object to this application.

The Applicant filed an affidavit in rejoinder to the $1st$ Respondent's affidavit in reply sworn by Boaz Nkoko. Mr. Nkoko reiterated that the PET bottle crushing line belongs to the Applicant who obtained it from its sister company in Turkey and leased it to the 3rd Respondent on 1st August 2019. He insisted that the title documents provided by the Applicant properly describe the PET bottle crushing line, its country of origin and its owner who is the Applicant. He stated that the lease/rent contract is authentic and properly executed. He concluded that even though the $2^{nd}$ and $3^{rd}$ Respondents owe the $1^{st}$ Respondent rent arrears, that alone does not entitle her to sell property held by the $2nd$ and $3rd$ Respondents on behalf of a $3^{rd}$ party to recover those rent arrears.

### **Issue arising**

Whether the PET bottle crushing line should be released from attachment.

## **Representation and hearing**

At the hearing of the application, the Applicants were represented by Mr. David Okello of M/S Novus Advocates & Solicitors, while the 1st Respondent was represented by Dr. Asa Mugenyi of M/S Mugenyi & Co. Advocates. The 2nd and 3rd Respondents were represented by Mr. Stephen Turyatunga Ikamukuba of M/S Leadman Advocates. Counsel filed written submissions to argue the application which I have considered, together with the pleadings and the laws and authorities cited.

## Determination of the issue

## Whether the PET bottle crushing line should be released from attachment.

**Section 44(1)** of the **Civil Procedure Act Cap 71** prescribes the types of property which are liable to attachment in the execution of a decree or order of court. It provides that all saleable moveable or immoveable property belonging to the judgment debtor, or over which or the profits of which he or she has a disposing power which he or she may exercise for his or her own benefit is liable to attachment. Order 22 rules 55, 56, 57 and 58 of the Civil Procedure Rules (CPR) anticipate situations in which property that is not legally liable to attachment is about to be attached or has been attached in execution.

**Order 22 rule 55** of the CPR enjoins courts to fully investigate all claims alleging that property that is intended to be attached or that has been attached is not liable to attachment. Order 22 rule 57 provides that where upon such investigation the court is satisfied that the property was, at the time of the attachment, in the possession of the objector on his or her own account or in the possession of the judgment debtor on the account of some other person, the court shall make an order releasing the property, wholly or to such extent as it thinks fit, from attachment. (See the decision in David Muhenda & 3 Ors V Margaret Kamuje, SCCA No. 9 of 1999.)

Therefore, purpose of objector proceedings is to prevent property from being attached and sold in execution if that property is, at the date of attachment, in the possession of a 3rd party on his or her own account or in the possession of the judgment debtor on account of some other person. (See Senteza Erieza & Anor v Twesigye Eliyasi & Anor, HCMA No. 57 of 2020.) To this end, objector proceedings reinforce Section 44(1) of the CPA to the extent that it provides that

it is only that property which belongs to the judgment debtor that is liable to attachment in execution of the decree against debtor.

The sole question to be decided in objector proceedings is whether, on the date of the attachment, the judgment debtor or the objector was in possession of the property sought to be released from attachment. Possession may be actual or constructive. For purposes of objector proceedings, a person who knowingly has direct physical control of a property at a given time has actual possession of it. A person who, although not in actual possession, knowingly has both the power and the intention at a given time to exercise control over a thing, either directly or through another person, is in constructive possession of it. (See Lucy Oker Lagol & 2 Ors V Bonga Ronald Okech & Anor, HCCA No. 119 of 2019)

A person who has constructive possession of property stands in the same legal position as a person with actual possession of it. The court is always interested in knowing whether the objector exercises dominion over the property. This is determined by examining available records disclosing the name of the person on whose behalf the property is retained. (See Lucy Oker Lagol & 2 Ors y Bonga Ronald Okech & Anor (supra)).

In the instant application, it is not disputed that the PET bottle crushing line that is the subject of the attachment in **EMA No. 0131 of 2024** is currently locked up in the 1st Respondent's Kyambogo warehouse. That machinery has been locked up there since sometime in 2020 when the Respondents had just filed **Civil Suit No. 0462 of 2020.** This application has now asserted that the PET bottle crushing line, consisting of a number of machines, came to be in that warehouse sometime around August 2019 after the Applicant leased it to the 3rd Respondent who was, at the material time, operating its factory there. In a bid to prove that the lease, the Applicant has adduced the lease contract, invoices for the machines and the correspondence it allegedly had with the 3rd Respondent over rent arrears for the machines under the lease.

The 1st Respondent contested the authenticity and genuineness of the lease contract. She conceded that the contract had been adduced as part of the 2nd and 3rd Respondents' trial bundle at the trial in Civil Suit No. 0462 of 2020 but that the version adduced then was not fully endorsed. She contended that the contract has simply been belatedly endorsed and presented to this Court in this application. She has also contended that, in any case, the PET bottle crushing

line does not appear to have been the subject of the lease contract as per the documents adduced. She asserted that those documents do not describe the components of the PET bottle crushing line in detail.

Having carefully reviewed all the materials on the Court record, I agree with the 1st Respondent that there are a number of unanswered questions on the authenticity of the lease contract and the existence of the lease. As a result, I am hesitant to find that the 2nd and 3rd Respondent held the PET bottle crushing line on account of the Applicant.

Even without revisiting the record in Civil Suit No. 0462 of 2020 to ascertain the details of the version of the lease contract that was adduced then, I have noticed that the Applicant has adduced 2 different versions of the lease contract before me in this application. The affidavit in support of the application presented one version while the affidavit in rejoinder presented another version. Annexure C to the affidavit in support was the "Contract for Renting of PET Bottle Crushing Line" vide 2019/2/GHC dated 1st August 2019. It specified the subject of the agreement as the PET bottle crushing line. The Equipment list in Item II thereof bore only two items as constituting the PET bottle crushing line, to wit, a Manuel Sorting Conveyor and a Crusher Loading Conveyor. This version did not state the amount of rent due but provided that "failure of payment" would result into the return of the machines to the Applicant.

In her affidavit in reply, the 1st Respondent pointed out these anomalies. She told the Court that the lease contract was invalid since it did not state the consideration that was to move from the 3rd Respondent to the Applicant. She also clarified that the contract did not describe the components of the PET bottle crushing line in the detail with which they had been described in this application. In response the Applicant filed an affidavit in rejoinder introducing a second version of the lease contract as part of Annexure A thereto. Interestingly this new version answered the queries raised in the affidavit in reply. It described the machines in greater detail and also stated the monthly rent payable, along with other duties on the part of the 3rd Respondent.

It does not appear fair and just to me for the Applicant to first present a version of the contract with many gaps just so that the 1st Respondent can point out those gaps and then it presents a different version of the agreement with more terms that attempt to deal with those gaps. Apart from foul play, there is hardly

any other logical explanation for presenting an abridged version of the contract in the affidavit in support and then the full version of the contract in the affidavit in rejoinder when the Respondents are no longer able to respond. It is also quite unusual for a genuine contract between 2 people over one subject matter to have 2 distinct but valid versions.

Counsel for the Applicant did not attempt to explain away these anomalies in his submissions. Although the Applicant claimed in its affidavit in rejoinder that it obtained the machines from its sister company in Turkey, that sister company was not named and no evidence was adduced of the agreement(s) through which those machines were obtained from it. No other title documents for the machines were adduced.

In its affidavit in rejoinder, the Applicant also adduced alleged demand notes for rent payment, replies thereto and a termination of the lease contract letter. Again, it is suspicious that these documents were only presented belatedly in the affidavit in rejoinder and not in the affidavit in support which would have allowed the 1st Respondent review and respond to them in her affidavit in reply. I have reviewed those documents and noticed that none of them was received or acknowledged by their addressee. The demand notices and lease termination letter were not acknowledged by stamp or signature by the 3rd Respondent. The replies to the demand notices were also not acknowledged by stamp or signature by the Applicant. In those circumstances, I am unable to find that those documents sufficiently corroborate the said lease contracts in proof of the lease.

I further take note that the 2nd and 3rd Respondents also laid claim to ownership of the machines in their factory. In Misc. Application No. 0419 of 2024 which was filed by the 2nd and 3rd Respondents seeking to set aside the Judgment and Decree of this Court in Civil Suit No. 0462 of 2020, ground (I) thereof was :

"That if this application is not granted, the 2nd Applicant's [now 3rd Respondent's] machinery will be unjustifiably sold in execution for mistakes, errors and omissions committed by her former counsel."

In paragraph 15 of his affidavit in support of that application, Mr. Ssekanjako Godfrey Kyaterekera, the 3rd Respondent's General Manager, similarly swore under oath that, if that application was not allowed, the 3rd Respondent's

machinery would be unjustifiably sold in execution. It is incredible that it is the same 2nd and 3rd Respondents who have now sworn affidavits in the present application claiming that the PET bottle crushing line belongs to the Applicant. The same Mr. Ssekanjako Godfrey Kyaterekera who earlier swore that the 3rd Respondent's machinery was going to be unjustifiably sold off in execution is the same person who is now telling the Court that most of that machinery actually belongs to the Applicant.

The last factor which undermined the Applicant's claim is the Applicant's delay in raising the claim. The Court recalls that the machinery in the warehouse has not just been attached in execution. That machinery has been under attachment for about 3 and a half years now, after the 1st Respondent secured an order for attachment of the same before judgment from this Court vide Misc. Application No. 486 of 2020. The Applicant did not come forward before or after that attachment to present its ownership claims over the machines. Even after Civil Suit No. 0462 of 2020 was heard and finally determined by this Court, the Applicant still did not appear. It was only when EMA No. 0131 of 2024 was called on for the 2nd and 3rd Respondents to show cause why execution should not issue that the Applicant surfaced.

Just like all court decisions, the decision and orders in Misc. Application No. 486 of 2020 is a public record and the Applicant can only blame itself for not coming to Court earlier to contest that decision. The alleged lessor-lessee working relationship between the Applicant and the 3rd Respondent should also have made the Applicant aware of the proceedings in Civil Suit No. 0462 of 2020 and how they might affect the Applicant's machines for all these years.

As earlier referenced, Order 22 rule 55(1) of the CPR binds courts to investigate claims alleging that attached property is not liable to the attachment. However the rule provides an express exception to the effect that no such investigation shall be made where the court considers that the claim or objection was designedly delayed. In my considered view, an objector who waits for 3 and a half years to object to attachment is guilty of inordinate delay and indolence. In this case, that inordinate delay and indolence makes it more probable than not that the said lease contract was not genuine.

All the above factors make it less likely than not that the alleged lease contract actually existed *ab initio*. It appears to me that the Applicant and the 2nd and 3rd

Respondents have simply connived to bring this application in order to frustrate the 1st Respondent from recovering the judgment debt in **Civil Suit No. 0462 of 2020.** I find that the evidence presented by the Applicant has failed to satisfy the Court on a balance of probabilities, that the $2^{nd}$ and $3^{rd}$ Respondents held the PET bottle crushing line on the Applicant's account. Accordingly this application fails.

Consequently, I make the following orders:

- $\mathbf{i}$ . This application is hereby dismissed. - Costs of this application are awarded to the 1st Respondent. ii.

atmodules

**Patricia Mutesi**

**JUDGE**

$(03/05/2024)$