Gold Star Insurance Company Ltd v Ssemwemba Ronald and Others (Miscellaneous Application No. 872 of 2020) [2022] UGHCCD 336 (4 May 2022)

Full Case Text

### IN THE HIGH COURT OF UGANDA AT KAMPALA

## lcrvrL DrvrstoNl

### MISCELLANEOUS APPLICATION NO. 872 OF 2O2O

## (AR|SING FROM CtVtL SU|T NO. 25 OF 2016)

# GOLD STAR INSURANCE COMPANY LTD APPLICANT [THIRD PARTY]

#### 10 VERSUS

- 1. SSEMUWEMBA RONALD (PLAINTIFF IN THE MAIN SUIT) - 2. STANBIC BANK (U) LTD - 3. M/S RELIABLE COMMUNICATIONS LTD - 4. MUJOBE HAMIDU RESPONDENTS

### 15 BEFORE: HON. JUSTICE ESTA NAMBAYO

#### RULING

The Applicant, Gold Star lnsurance Company Ltd, brought this application under section 98 of the civil Procedure Act, s.33 of the Judicature Act, order 43 Rule 4 (2) & (3) CPR and Order 52 Rule 1 of the Civil procedure Rules, against 20 Ssemwemba Ronald, Stanbic Bank (U) Ltd, M/s Reliable Communications Ltd and Mujobe Hamidu, (hereinafter referred to as the 1't, 2nd, 3d and 4th Respondents respectively), seeking for. -

1. A stay of the execution of the Decree in High Court Civil Suit No.25 of 2015 pending determination of the Applicant's Appeal.

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## 25 2. Costs of the application be provided for.

The grounds of this application are laid out in the affidavit in support of the applicatron by Mr. Enock Mudadi, the Chief Operations Officer of the Applicant, but briefly are that: -

- (D The Applicant is not satisfied with the decision of Court in High Court 30 Civil Suit No.25 of 2015 delivered on the 17th August, 2020. - (ii) On the 28th August 2020, the Applicant filed a Notice of appeal against the decision of the High Court. - (ii| The intended Appeal raises serious questions of taw and fact and the appeal has a high likelihood of success. - 3s (iv) The Applicant's appeal in the Court of Appeal shall be rendered nugatory in the event of execution prior to disposal of the Appeal. - (v) The Applicant shall suffer substantial and irreparable loss if this application is not granted. - (vi) The application has been made without unreasonable delay. - 40 (vii) lt is in the interest of justice that this application is granted.

The Respondents through Ssemwemba Ronald, the Plaintiff in Civil Suit No.25 of 2015, swore an affidavit opposing this Application.

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## The brief facts of this case

45 The brief facts of this case are that the 1st Respondent instituted a suit against the Applicant as a third party and court found the Applicant liable as a third party. The Applicant is aggrieved by the court's finding and has filed a notice of appeal, hence this application.

#### Representation

50 Learned counsel ssebuwufu Busaame appeared for the Applicant while counsel Leila Galibu is for the Respondent. Counsel have filed written submissions for the parties as directed by court.

The issues for trial are: -

- Whether there is an arguable appeal; and 1 - 55 Whether the appeal would be rendered nugatory if this application is not granted. 2

Submissions for the Applicant.

Counsel relied on the case of Nalwoga Gladys -v- EDC? Limited and George Ragui Kamoni MA No. 07 of 2013 where court relied on the decision in Lawrence 60 Musiitwa Kyazze -v- Eunice Busingye sccA No.lg of 1990 ttgg2l lv KALR ss, where it was held that;

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" The purpose of the application for stay of Execution pending appeal is to preserve the subject matter in dispute so that the rights of the appel/ant who is exercising his/her undoubted right of appeal are safe guarded and the appeal if successful, is 55 not rendered nugatory."

Counsel explained that the grounds for granting a stay of execution pending an appeal are founded on whether there is an arguable appeal and whether the appeal would be rendered nugatory if such application is not granted. On the ground of whether there is an arguable appeal, Counsel submitted that paragraph g of the 70 affidavit in support and paragraph 4 and 5 of the affidavit in rejoinder state that a Notice of Appeal and a letter requesting for a certified record of proceedings were filed and served as required by the law on the 28th August, 2020. He referred this court to annexure "C and E" to the affidavit in support of the application and explained that the appeal is only pending availability of the typed proceedings to 7s the Applicant. That paragraph 9 of the affidavit in support of the application and paragraph 7 of the affidavit in rejoinder, show that the appeal raises serious questions of law and fact, it is not frivolous and has a likelihood of success. Counsel averred that the Applicant was not liable to indemnify the 2nd Defendant as the insurance Policy did not cover the claims stated. That the policy taken was a 80 contractor's plant and machinery policy and not a comprehensive policy. That there was no insurance Policy anymore since the insured defaulted on the payment of

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premium by the time of the accident and as such the claim was misdirected to the Applicant instead of Leads lnsurance which had issued a certificate of insurance which was at the time of the accident displayed on the Motor Vehicle as required 8s under the Motor Vehicle lnsurance (Third Party Risks) Act

Counsel further submitted that the award by the Learned Trial Judge was made in error as she did not set the suit down for hearing and formal proof to determine whether there was liability in negligence on the part of the defendants. That the error was the basis for the declarations that the Learned Trial Judge made and the

90 basis for her award and if corrected, the findings fall away

Secondly, that the amount to be paid was not proved in evidence as payable and is not payable as of right. That the Plaintiff's claim of UGX 58,000,000/= ought to have been proved before Court and without formal proof or hearing, it warrants the Court of Appeal's interrogation

95 Counsel further argued that there are special circumstances warranting the issue of an order of stay. That the learned trial Judge recognized the fact that the 2',d Respondent opposed the Plaintiff's claim, and yet again she went ahead to award the Plaintiff UGX 100,000,000/= and costs of the suit without a hearing

100 referred to the case ol Tropical Commodities Suppliers Ltd and 2 others -v-As to whether if the execution is not stayed, substantial loss would occur, Counsel

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lnternational Credit Bank Ltd (in liquidation) Misc. Application No.379 of 2003, where court noted that;

" substantlal loss does not represent any particular amount or size. lt cannot be quantified by any particular mathematical formula. Rather it ts a qualitative concept.

105 lt refers to any losq great or small that is of real worth or value as distinguished from a loss without value or a loss that is merely nominal."

That in the instant case, if the Applicant is left to pay to the Respondents UGX 120,000,000/= (Uganda Shillings One Hundred Twenty Million), it would suffer substantial loss. Counsel explained that this application has been made without 110 unreasonable delay

On the issue of security for due performance, Counsel relied on the case of John Baptist Kawanga -v- Namyalo Kevina and Ssemakula Laurence Misc. App No.l2 of 2017 at P.7 where court held that payment of due performance is not mandatory. Referring this court to Order 43 Rule 4 of the CPR, he explained that the 115 High Court has the inherent jurisdiction to stay any of its orders pending an appeal if the court is satisfied that the same would serve the interests of justice. He relied on S. 33 of the Judicature Act and S. 98 of the Civil Procedure Act and prayed that Company in Uganda, the Applicant's status should be considered as being a credible 720 institution that would not fail to honor their legal obligations Court exercises its inherent powers to decide the same. That as a licensed insurance

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Page 5 of 12 ## Submissions for the Respondents

vexatious and an abuse of the Court process. That it is clear that a Notice of Appeal is not an appeal. That the Applicant only filed a Notrce of appeal requesting for the 725 lower Court record and to date, no appeal has ever been filed. He relied on Rule 28 of the Judicature (Court of Appeal Rules) Directions and argued that the other limb of this ground is that the Third Party has no arguable case. That the argument that the insurance policy did not cover the claims stated since the policy was a contractor's plant and machinery policy and not a comprehensive policy and that 130 there was no insurance policy anymore since the insured defaulted on payment of the premium by the time of the accident and further that it was Leads lnsurance which had issued a certificate of insurance which, at the time of the accident was displayed on the motor vehicle is not tenable. Counsel invited Court to consider the liability clause in the policy document which makes the Applicant liable regardless of 13s the fact that it was a contractor's plant and machinery policy issued by Leads lnsurance and displayed on the motor vehicle. That there was no default on payment of the premium ln reply, Counsel for the Respondents contended that this application is frivolous,

Counsel explained that in her judgment, the trial .ludge stated that the third party's liability shall not exceed UGX 100,000,000/= per period of insurance and that it was

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140 the amount rt was liable to pay. Counsel argued that this was clearly laid out in the policy

Counsel also submitted that should the stay be granted; the Applicant should furnish security for due performance of the decree. He agreed that security for performance of the decree is not mandatory as she relied on the cases of lawrence Musiitwa

745 Kyazze -v- Eunice Busingye scA No.rs/1990, which emphasized compliance to order 39 Rule 4 (now order 43) of the civil procedure Rules. That the same was emphasized in Kampala Bottlers -v- uganda Bottlers (lggi) tLR Z2j.

## Analysis:

ln the case of tljagar singh -v- Runda coffee Estates Ltd tlg66l EACA 266, Sir Ctement De Lestang, Ag. V.p. stated that: -

"........ lt is only fair that an intended Appellant who has fired a notice of appear should be able to apply for a stay of execution to the court which is going to hear the appeal as soon as possible and not have to wait until he has lodged his appeal to do so. owing to the long delay in obtaining the proceedings of the High court it may be many months before he could /odge his appeal. rn the meantime, the execution of the decision of the court below could cause him irreparable loss,"

The above position was re-echoed in the case of The Attorney General of the Republic of uganda -v- The East African Law society 6t The secretary General of

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the East African Community, EACJ Application No. 1 Of 2013 where the court 160 noted tha t;

" a notice of appea/ is a suffrcient expresston of an intention to file an appeal and such an action is sufftcient to found the basis for grant of orders of stay in appropriate cases"

The Applicant having filed a notice of appeal, I find that it has established sufficient 165 ground to institute this application

Under Order 43 rule 4(3) of the CPR, there are three conditions that the Applicant for stay of execution must satisfy before the applications for stay of execution is granted and they are as follows: -

(a) that substantial loss may result to the party applying for stay of execution unless r7o the order is made;

(b) that the application has been made without unreasonable delay; and (c) that security for costs has been given by the Applicant for the due performance of the decree or order as may ultimately be binding upon him or her.

77s ln the instant application, I note that the judgment in issue was granted on the 17th of August, 2020, the notice of appeal was filed on the 28th of August, 2020 and thereafter the Applicants filed an application for an interim stay of execution on the 6th of Novemb er, 2020 together with this application for stay of execution pending appeal. The application for interim order of stay of execution was granted on the 8th

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180 of December, 2020. lt is my view in the circumstances of this case that this application was filed without unreasonable delay.

On the ground of substantial loss, in Andrew Kisawui -v- Dan Oundo Malingu HCMA 467/2013, where Court found that;

"...substantial loss cannot mean ordinary loss or the decretal sum or costs which must be settled by the losing party but something more than that."

185 190 195 The Applicant in this case is required to pay 100,000,000/- [one hundred million shillings onlyl as indemnity. lt is the Applicant's contention that it is not liable to indemnify the Respondent since the insurance policy did not cover the claims stated and that the policy taken was a contractor's plant and machinery policy and not a comprehensive policy. That there was no insurance policy anymore because the insured had defaulted on payment of premium by the time of the accident. ln Tropical Commodities Suppliers Ltd and Ors -v- lnternational Credit Bank Ltd (ln Liquidation) (2004)2 EA 331, Ogoola, J, (as he then was), opined that; "substantial loss does not represent any particular amount or size. lt cannot be quantified by any particular mathematical formulae. lt refers to any loss, great or smatt that is of real worth or value as distinguished from loss without a value or that which is merely nominal."

According to paragraph B of the affidavit in rejoinder, the bill of costs has been taxed and allowed at 12,974,100/- [Twelve million, nine hundred seventy-four

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200 thousand one hundred shillings onlyl. ln my view, improper payment of Ushs' 112,974,100/- [one hundred twelve million nine hundred seventy-four thousand and one hundred shillings onlyl would amount to substantial loss'

onthegroundofsecurityforcosts,inMusiitwa-v. EuniceBusingyeCANo. l8/lgg0courlnotedthatapartyseekingastayshouldbepreparedtomeetthe conditions set out in order 43 rule 4(3) CPR. ln paragraph 13 of the affidavit in support of the application, the Applicant states that it is willing and able to deposit security for due performance of the order. I find no reason to doubt the Applicant's ability to deposit the required security for due performance of the order. 205

ln view of the above, I find that the Applicant has fulfilled all the required conditions for the grant of this order and I do hereby allow this application with orders that: -

1. The Applicant deposits a sum of Ushs. 100,000,000/- [one hundred million shillings onlyl as security for costs in a period of 14 days from the date of this ruling. 2t0

## 2. Costs of this application stay in the cause.

lso order.

Dated, signed and delivered by mail at Kampala this 4th day of May' 2022' 2L5

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Esta Nambayo

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JUDGE

4th/o5/2022.