Kampala Bottlers Ltd v Uganda Bottlers Ltd (Civil Application 25 of 1995) [1995] UGSC 25 (1 August 1995)

## IN THE SUPREME COURT OF UGANDA

## AT MEN 'O

**JSC** $TSEKOOKO - JSC)$ (CORAM: MANYINDO - DCJ, ODER $\&$

CIVIL APPLICATION NO. 25/95

BETW $E$ N

KAMPALA BOTTLERS LTD. :: :: :: :: :: :: :: APPLICANT

Vs

UGANDA BOTTLERS LTD. :. :: :: :: :: :: :: RESPONDENT

(Intended Appeal from the judgment of the H/C of Uganda at Kampala in Civil Suit 435/92 by the Hon. Jis:iceD. C. Porter, dated $2-5-95$ ).

## REASONS FOR THE DECISION:

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The applicant brought this application for stay of execution pending the determination of their appeal arising from High Court Civil Suit Nos. 435 of 1992 and 114 of 1992, which were consolidated y the High Court. We heard the application and allowed it. We promised to give the reasons later. We now give them.

The dispute in the High Court was about ownership o certain industrial premises now occupied by the applicant company on 6th Street, Kampala. The trial Judge found for the respondent company and ordered the applicant company to vacate the suit premises in lavour of the respondent. He also omlered the Chief Registrar of Titles to cancel the names of the applicant from the register and substitute the respondent therefore.

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The applicant sought an order of stay of execution from the trial Judge pending an appeal to this Court but the trial Judge saw no merit in the application as ther. was no likelihood of the appeal succeeding in this Court. For that reason he did not find it necessary to conside the provision in Order 39 r $(4/3)$ of the Civil Procedure Rule: relating to the exercise of discretion in the matter.

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**Activity**

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However, he granted a temporary stay for 14 days. The reason for the stay was stated thus:-

> "However, there has been enough difficulty in this case before it came to hearing; and I would not wish to encourage precipitate action: I therefore would grant a temporary stay of 14 days from to-day: to allow the applicant, if he can, (sic) to to make $h_i$ tever other application in this matter he (sic) may be advised."

The applicants complaint in this Court is that the trial Judge decided the matter on wrong premises; the test is whether the application for stay of execution meets the conditions stipulated in 0 39 $r$ 4(3) of the Civil Procedure Rules and not whether the appeal is likely to succeed. Counsel for the applicant relied on the decision of this court in: Busingye, Civil Application No. 18 of 1990 Kyazze v with regard to the requirements in 0 39 $r \quad 4.3).$

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He also submitted that if it was necessary for the applicant to show that the appeal was likely to succeed, then this condition had also been met in that the appeal contains a substantial point of law for decision, namely, whether, having decided the substantive issue of fraud in favour of the defendant/applicant so as to effectively dispose of the suit in favour of the applicant, the learned Judge was right to say that the second issue, the reliefs issue, was incorrectly drawn, and in holding that the real issue was nullity of the contract when nullity was neither pleaded or traversed save for fraud.

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**COLO**

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Mr. Mulira, Counsel for respondent, opposed the application on the ground that the application did not satisfy two of the conditions $:$ tipulated under 0 39 r 4(3) in that it did not show what substantial financial loss the respondent would suffer. In his view a mere loss would not do. The second condition relates to security for costs. According to Mr. Mulira, the undertaking on security for costs has to be given before and not after the appeal is $\log_{\ell}$ ed in Court. He submitted that if the application succeeds then the applicant should be ordered to deposit Shs. 40 million as security for costs as the respondent's expenses had ince gone up due to air tickets they had bought for their vitnesses wo came to Uganda from overseas to testify in the case

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As we have pointed out above the trial Judge did not bother to consider the above principles as he saw no merit in the proposed appeal. This is how he put it:-

> $"$ ----I do not think that there is a likelihood of success. Indeed I should not have written the judgment I did if I had thought so. And here lies the dilema of a judge in applications such as this: he may be wrong, but he has already expressed his convictions in the matter, and he is enjoined to ee that the appeal be rendered nugatory. I do not see a likelihood of success in this appeal on the grounds set out. I therefore will not go on to consider the matters which would assist me to exercise my discretion.

However, there has been enough difficulty in this case before it came to hearing:

- and I would not wish to encourage precipitate action: I therefore would grant a temporary stay of 14 days from today."

The temporary stay was to enable the applicant come to this Court and seek a longer stay. While we can understand the Judge's feeling; we do not see why a Judge should really be troubled by a challenge to his decision on appeal. Certainly this factor should not be allowed to influence the Judge's decision whether or not to grant a stay of execution. The matter is clearly governed by 0 39 $r$ 4(3) of the Civil Procedure Under that provision the applicar Code. must show $(a)$ that substantial loss may result to the applicant unless the order of stay is made, at the application has $(b)$ been made without unreasonable delay and $(c)$ that security for costs has been given by the applicant.

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In our opinion once the above three conditions are fulfilled by the applicar then the order if stay ought to be granted, regardles: of whether th appeal will fail or succeed. In this case it was co seded that the Notice of appeal was filed within 24 tours of the decision of the trial Judge and that this ipplication was brought within reasonable time.

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According to the affidavit of Amos Agaba, the Managing Director of the applicant company, the applicant is a leading manufacturer of soft drinks with a sizeable number of employees and pays huge taxes to Government. That claim was not challenged by the respondent. It therefore appeared to us that the applicant was a successful company which would suffer substantial financial and other losses if its operations were stopped by an order of execution.

That left only the matter of security for costs. Mr. Mulira contended that under 0 39 r 4(3) (c) an application for stay of execution pending an appeal must be accompanied by payment of security for conts or at least by an undertaking, in writing, to pay a g ven sum security for costs of the appear. As the applient had not complied with that provision his application was incompetent and must fail.

We do not see the relevance of this argument as the trial Judge did not proceed under 0 39 r 4(3). He simply allowed the app icant a stay of 14 days to enable them either bring the matter to this Court or abandon it alltogether. In any case this Court does not operate under he Civil Procedure Rules in question.

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An application for stay of execution in this Court is governed by Rulle 5 of the Rules of this Court. That Rule empowers this Court to stay executions pending appeals in Civil proceedings on such terms as this Court may think fit. There is of course also the mandatory provision in Rule IO4 for the payment of a fixed sum as security for costs of the appeal. There is no legal requirement in this Court that further security for costs must be paid at the time the appeal or application is lodged. Dr. Byamugisha informed us that the applicant is prepared to deposit a sum of Shillings 14 million on a joint Account in the names of Mulira & Co. Advocates and Dr. Byamugisha\*: firm in Standard Chartered Bank. We thought that that was a reasonable offer.

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It was for the above reasons that we granted the order f stay of execution per ing the determination of the ap eal. The security for costs should be deposited at the said Bank forthwith.

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DATED at Mengo This:....... Day of:....................................

Jayonde S. T. MANYINDO

DEPUTY CHIEF JUSTICE $A. H. O. ODER$ JUSTICE OF THE SUPREME COURT $\mathbf{W}$ RSEKOOKO

JUSTICE OF THE SUPREME COURT