Housing Finance Bank Limited and Another v Musisi (Miscellaneous Application 158 of 2010) [2011] UGCA 15 (26 September 2011)

Full Case Text

# THE REPUBLIC OF UGANDA

IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

# MISCELLANEOUS APPLICATION NO,1 58I2O1O

HOUSIT\F FINANCE BANK LTD

5 SPEEDWAY AUCTIONEERS APPLICANTS

VRS

EDWARD MUSISI RESPONDENT

CORAIT/: HON. JUSTICE S. B. K. KAVUMA, JA

HON, JUSTICE A. S. NSHIMYE, JA

10 HON. JUSTICE REMMY KASULE, JA.

## RULING OF THE COURT

The first Applicant, is a bank offering banking services in Uganda. The second Applicant is a firm doing auctioneering business.

15 The Applicants seek through this Application, an order of stay of execution of the orders of this Court of the judgement delivered on 26.08.20'10 in Civil Appeal No.25 of 2004 pending an appeal against the said decision in Supreme Court of Uganda Civil Appeal No.22 of 2010.

20 Learned counsel James Nangwala represented the Applicants, while Ronald Oine appeared for the Respondent.

#### Background:

- By way of background, the Respondent was a mortgagor to the first Applicant 25 of the property comprised in Kibuga Block 28 plot 256 with a commercial building thereon, situate at Makerere, Kavule. He moftgaged the same to the first Applicant as security for a loan sum of money advanced by the first Applicant to the said Respondent on 07.1 1 .95. - 30 According to the first Applicant, the Respondent defaulted in his loan repayments, thus making the whole sum due and payable at once and when the Respondent failed, on demand by the first Applicant, to effect payment, the flrst Applicant engaged the second Applicant, who, through auction, sold the suit property to a third party in order to recover the mortgage sum due.

#### 35

Contending that he had already paid to the first Applicant all the moneys due under the mortgage, the Respondent resisted the auctioning and sale of his property, and when the same went ahead, he sued the Applicants in the High Court at Kampala in H. C. C. S No.27 of 2002.

The High Court (R. O. Okum Wengi, J.) found that the sale of the Respondent's property was lawful and thus dismissed his suit on 27.11. O3. The Respondent appeabd to the Court of Appeal in Civil Appeal No.25 of 2004. On 26.08.2010, this Courtfound thatthe learned trialJudge had erred in finding that the sale of the Respondent's property had been lawful. The

appeal was thus allowed, the sale of the property comprised in Kibuga Block 28 plot 256 was set aside, the Respondent's proprietary rights in the property were restored and it was ordered that the Certificate of Title to the property be returned to Respondent free from any incumbrance. The Respondent was 50 also awarded, as against the Applicants, general damages of Shs.100,000,000/= with interest thereon of 12o/o p.a from the date of judgement till payment in full.

Dissatisfied with the judgement of the Court of Appeal, the Applicants 55 appealed to the Supreme Court against the whole decision. We were informed, at the hearing of this application on 26.09.2011, by Applicants' counsel, that the appeal in the Supreme Court is now awaiting judgement.

The Applicants through another Miscellaneous Application No.159 of 2010 60 did on 15.1 1.2010, obtain from the Registrar of this Court an lnterim Order of Stay of the Orders of this Court made in Civil Appeal No.25 of 2004 on condition that the Applicant(s) deposit in Court the Certificate of Title to Block 28, plot 256 Makerere, Kavule, within 21 days from the date of the Order.

# 65 TheApplicanfs'case.'

It was submitted that the Applicants, being dissatisfied with the Court of Appeal decision in Civil Appeal No.25 of 2OO4, had app'ealed the whole decision to the Supreme Court in Civil Appeal No.22 of 2010.

/ J

70 There was a strong probabllity of the appeal succeeding as the Court of Appeal came to the wrong conclusion that the Respondent had paid all monies due under the mortgage by the time the suit property was sold. This, in fact, was not the case as the entire loan amount had become repayable, as a whole and at one go, on default of the Respondent in meeting payment of 75 the agreed upon loan installments.

It was further submitted that this Court had also erred because by reason of the sale, the suit property ownership had passed into the hands of a third party and this third party could not be dispossessed of the property without 0 being heard. Yet Court had made Orders resulting in dispossessing of the third party of the suit property without affording any hearing to this Third party. Further, the Court of Appeal was not right to order payment of general damages to the Respondent, when in fact it was the Respondent who still owed money to the first Applicant under the mortgage loan. These grounds i made the possibility of the appeal succeeding in the Supreme Court to be very high. Learned counsel for Appllcants, relying on the case authorities of:

# FRAA'C/S MANSIO MICAH \_ VS - NUWA WALAKIRA

### [1992-93] HCB pp 88 and 89

and

### LAWRENCE M USI ITWA KYAZZE

-vs-

### EUNICE BUSINGYE, S. C. C. A NO.l8 OF 1990,

bmitted that this Court should, under its inherent powers, stay execution of orders in Civil Appeal No.25 of 2004 so as not to render the appeal in the upreme Court nugatory.

## The ResPondenf's case

For the Respondent, it was submitted that the Applicants had not discharged the burden of convincing Court that they will suffer irreparable or substantial loss if the decree was executed while the appeal was still pending. By reason of this failure the Applicants' application ought not to be allowed.

The Applicants had not shown to Court that if the certificate of title to the suit 105 property is returned to the Respondent and the damages paid, there was no likelihood of recovering the same from the Respondent, should the decree be overturned on appeal by the Supreme Court. The affidavit of one Francesca Nakaggwa, Senior Legal Officer and Acting Company Secretary of the first Applicant, filed in support of the application, just made a blanket assertion in 10 paragraph 18 thereof, that if orders are not stayed, the Applicants will suffer irreparable injury. The Applicants gave no evidence at all as to how they would suffer this irreparable injury.

Further, but independent of the first ground of opposing the application, it was r5 submitted for the Respondent that the Applicants are not coming to Court, in this application, with clean hands. The Applicants in Court of Appeal Miscellaneous Application No.159 of 2010 were ordered on 15.11.2010 by the Registrar, Court of Appeal, to deposit in this Court the certificate of Title to

buga Block 28 plot 256, Makerere Kavule, within 21 days from the date of the Ruling i.e. 15.11.2010. The Order was made as a condition for an lnterim Order to Stay execution of the decree pending the disposal of this substantive Application i.e. 158 of 2010.

The Applicants, fully aware of this Order, without giving any explanation to the Registrar, Court of Appeal, to explain and justify their non-compliance with the same, and without taking any steps to stay or appeal against the said Order in accordance with the law, just chose to neglect complying with the Order by not taking any steps to deposit with this Court the Certificate of Title of the suit property. The conduct of the Applicants in overlooking the Order of this Court to deposit the title deed of the suit property with this Court became even more serious, as an act of contempt of Court by the Applicants, by the fact that the third party, Messrs Micro Enterprise Development Network Ltd, who according to the Applicants, had bought the suit property and was in possession of the certificate of title, did on 14.10.2010, after judgement of this Court had been delivered, enter into a tenancy agreement with the Respondent, thus acknowledging him as the Landlord. This Third party could not therefore, by inference, have refused to hand to Court the certificate of title.

) Counsel for Respondent relying on the authorities of:

GOLE NICHOLAS DAVIS VS LOI KAGENI KIRYAPAWO C. A ELECTION APPLICATION NO.l8 OF 2007,

145 THE ADMINISTRATOR GENERAL (THROUGH THE LAWFUL ATTORNEY KYOMUHENDO JOLLY CHRISTINE VS NATIONAL SOCIAL SECURITY FUND & OTHERS: OOURT OF APPEAL M. A. No.206 OF 2007

#### and

# STEPHEN BYARUHANGA & OTHERS VS ABUBAKARI KATO KASULE & 150 ANOTHER COURT OF APPEAL M. A. NO.37 OF 2007,

prayed Court to find that there is no merit in the Application, and that the Applicants had come to Court while in the act of committing contempt of Court and thus not with clean hands. Accordingly, the Application had to be dismissed.

# 155 CourT's Resolution of fhe issues.'

J 7 J

We have carefully studied the pleadings, considered the submissions of respective learned counsel as well as the applicable law, both statutory and the case law authorities cited to Court.

60 This Court is vested with powers to grant a stay of execution of its Orders to a deserving Applicant. These powers are specifically given by Rule 6 (2) (b) of the Judicature (Court of Appeal Rules) Directions: Sl 13-10, in case of an appeal being lodged to this Court. As to the appeal from this Court to the Supreme Court, the power to stay execution is inherent in this Court under )5 Rule 2 (2) of the same Rules, whereby this Court has powers to make such orders necessary to meet the ends ofjustice and/or to prevent abuse of Court process.

As a matter of law, a stay of proceedings puts a stop or a stay on another conduct of the proceedings in Court at the stage to which those proceedings have reached. An order of stay of proceedings avoids the trial or hearing of the action taking place where the Court finds it just and convenient to make such Order. The order of stay may also prevent undue prejudice being occasioned to the opposite party or to prevent the abuse of Court process. The order is made in exercise of the Court's discretion, which discretion must be exercised judiciously. An Order to Stay should be made very sparingly and only in exceptional circumstances: See: COURT OF APPEAL ELECTION PETITION APPLICATION NO.18 OF 2007: GOLE NICHOLAS DAVIS VS LOIKAGENI KIRYAPAWO, unreported.

,tr

0 The Applicant for an order of stay has the burden to prove the grounds why a stay should be granted. The Applicant must prove to Court, in case of a decreed property, like is the case in this Application, that once such a property is disposed of, while the appeal is still pending, there is no likelihood of getting back that property, should the appeal succeed. Further, where a i right of appeal exists, the Court, as a general rule, ought to exercise its discretion in such a way as not to render the appeal nugatory: See: SCCA

No.l2/2008: G. AFARO V UGANDA BREWERIES LID and also

SCCA 2/2006: IDAH ITERURA V JOYCE MUGUTA, both unreported.

The Applicant, in order to move Court to exercise its discretion whether or not to grant the Order of Stay, must adduce evidence to Court that he/she will sutfer substantial loss if the decree was executed, notwithstanding that the decree might be set aside. See COURI OF APPEAL OF UGANDA CIVIL APPLTCATION NO.37 OF 2007: STEPHEN BYARUHANGA & 4 Others Vs ABUBAKARI KATO KASULE & ANOTHER, unreported.

ln an affidavit dated 01.09.2010, filed in support of the Application, Ms Francesca Nakaggwa stated in paragraph 18 thereof:

## "18. That if the orders are not stayed, the Applicants will suffer 200 irreparable injury".

Apart from not explaining or adducing evidence as to how each of the Applicants will suffer irreparable injury, this affidavit does not allege what prejudice if any will be caused to the Applicants if an order of stay is not granted; or whether there would be any abuse of Court process. Thus the 05 Applicants have not, in any way, shown what substantial loss they are likely to suffer if an Order of Stay is not issued.

Applicants' counsel addressed Court from the Bar that the appeal in the Supreme Court had already been argued and was only awaiting judgement of 0 that Court. There is also evidence by this Court that on 26.08.2010, the third party to whom the Applicants had purported to sell the decreed property had taken up occupation of the said property as a tenant of the Respondent. Therefore, the possibility of the decreed property disappearing, during the pendency of the appeal in the Supreme Court, is very remote indeed.

20 fs Learned counsel James Nangwala, both in his conferencing notes and in his submissions to Court on this point, just submitted to us that this Court has a duty to see to it that if the appeal is successful, the same is not rendered nugatory. He did not explain, let alone cause appropriate evidence to be adduced before us, as to how the appeal would become nugatory if an order of stay is not granted. We have also noted that in the supplementary affidavit dated 06,12.2010, in support of the application, Mr. Mlchael Mugabi, the first Applicant's General Manager, Legal Services and Company Secretary, does not address the issue at all.

- 5 Accordingly, having considered the evidence, the submissions of counsel and the position of the law on this point and the authorities cited to Court, we find that the Applicants have not made out a case to be granted an Order of Stay in this regard. - ) We now consider the issue of whether the Applicants have come to this Court in this Application with clean hands. lt was submitted for the Respondent that the Applicants having failed to comply with this Court's order in Civil Application No.159 o'f 2010 made by the Registrar of the Court on 15.1 I .2010 whereby an interim order of stay was granted on condition that, the Applicants deposit in Court the certificate of title of Kibuga Block 28 plot 256 Makerere Kavule, the Applicants acted and are continuing to act in contempt of Court. They are thus coming to Court with unclean hands. Therefore, this Court's discretion cannot be exercised in their favour.

Submitting in reply, learned counsel for the Applicants urged us not to revert to what had transpired in Application No. '159 of 2010, which only sought an interim Order of Stay. Counsel prayed us to consider the merits of this substantive application on its own without considering what had happened to the Court orders in the interim Application. Learned counsel clted no legal authorlty, whether statutory or case law, or othenruise, for his submission.

ln our considered judgement this particular matter is of crucial importance. The principle of law is that the whole purpose of litigation as a process of judicial administration is lost if orders issued by Court through the set judicial 50 process, in the normal functioning of the Courts, are not complied with in full by those targeted andlor called upon to give due compliance.

'.45

7 f

A party who knows of an order, regardless of whether, in the view of that party, the order is null or valid, regular or irregular, cannot be permitted to t5 disobey it, by reason of what that party regards the order to be. lt is not for that party to choose whether or not to comply with such an Order, The Order must be complied with in totality, in all circumstances by the party concerned, subject to that party's right to challenge the order in issue, in such a lawful way as the law permits. This may be by way of Revision, Review or by 0 appeal. See: CHUCK V CREMER (1 Corp Jemp 342). We hasten to add that it is the responsibility and duty of the party concerned, in case that party for some genuine reason, finds compliance with the Court Order not possible, to appropriately move the Court issuing the order and bring to the attention of that Court the reasons for non compliance. This is to ensure that the Court

issuing the order not only must not be held in contempt, but must not, whatever the circumstances, appear to be held in contempt by any litigant.

Otherwise to disobey an Order of Court, or offer no explanation for non compliance to the issuing Court, at any party's choice or whims, on the basis that such an order is null or irregular, or is not acceptable or is not pleasant to 70 the party concerned, is to commit contempt of Court. A Court of Law never acts in vain and, as such, issues touching on contempt of Court take precedence over any other case of invocation of the jurisdiction of the Court: SEe WILDLIFE LODGES LIMITED V COUNTY COUNCIL OF NAROK AND ANOTHER: [2005] 2 EA 344 (HcK).

75 A party in contempt of Court by disobeying an existing Court Order cannot be heard in a different, but related cause or motion, unless and until such a person has purged himself/herself of the contempt: See: HADKINSON V HADKINSON [1952] 2 ALL ER 575 and MAWANI V MAWANI [1974 KLR 159. See also: COURT OF APPEAL CONSTITUTIONAL COURT OF 0 UGANDA APPLICATION NO.19 OF 2011: MUSISI & ANOTHER VS N AM U G ENYI M ARG ARET, unreported.

ln the case of the Applicants, this Court, through its Registrar, while exercising its powers and acting as a Court, in Application No.159 of 2010, i issued the following order on 15.11.2010:-

"7. The lnterlm Order of stay of the orders of the Court in Civil Appeal No.25 of 2004 is granted on condition that the Applicant deposlts in Court the Ceftificate of Title to Block 28, plot 256 Makerere, Kavule, within 21 days from the date of this Ruting (1Sth Nov. 2O1O)".

which was not rebutted by the Applicants, to date none of the Applicants has complied with the above Order by depositing the certificate of Title in Court. The Court issuing the Order, was not moved by any of the Applicants to explain why compliance with the order was not possible. The Applicants acted as if the Order to deposit the certificate of title was of no concern to them and this went on from 15.11.2010, the date of the order, to date. FnccorOing to the Court record and affidavit evidence of the Respondent,

:95

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,( r. I

We received no plausible explanation from Counsel for the Applicants as to why the Applicants acted with contempt of Court by paying no regard at allto 00 the Court Order to deposit the certificate of title of the suit property with this Court, or to give an explanation to Court for non compliance.

The Applicants are, therefore, hereby found to have come to this Court with unclean hands as they came having committed contempt of Court by 05 disobeying the Court order of 15.11.2010. Accordingly the Applicants cannot have this Court's judicial discretion exercised in their favour before each one of them has purged himself/herself of the contempt.

## "He who seeks equity must have clean hands".

10 ln the result this Application stands dismissed with costs to the Respondent.

Dated at Kampala this .................................... $.....2011.$ S. B(K. Kavum $\cdot$ JUSTICE OF APPEAL A. S. Nshimye **JUSTICE OF APPEAL** legge Remmy K.1 **JUSTICE OF APPEAL**

$\cdot$ 0

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26.09.2011.

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