Kesacon Services Limited v Stanbic Bank Limited (Miscellaneous Application 305 of 2024) [2024] UGCommC 273 (23 July 2024)

| 5 | THE REPUBLIC OF UGANDA<br>IN THE HIGH COURT OF UGANDA AT KAMPALA<br>[COMMERCIAL DIVISION]<br>MISCELLANEOUS APPLICATION NO. 305 OF 2024 | | | |----|----------------------------------------------------------------------------------------------------------------------------------------|---|------------| | | | | | | | | | | | | | | | | | [ARISING OUT OF MISCELLANEOUS APPLICATION NO. 724 OF 2023] | | | | 10 | [ARISING FROM CIVIL SUIT NO. 66 OF 2012] | | | | | KESACON SERVICES LIMITED | ] | APPLICANT | | 15 | VERSUS | | | | | STANBIC BANK UGANDA LIMITED | ] | RESPONDENT | | | Before: Hon. Justice Ocaya<br>Thomas O. R | | |

#### 20 **RULING**

#### **Introduction**

This application arises from an earlier application, HCMA 724 of 2023 between the same parties which was determined by this court.

## *HCMA 724/2023*

The Respondent herein commenced HCMA 724 of 2023 in this court. In that Application, the Applicant proceeded under Section 33 Judicature Act, Section 82 and 98 of the Civil Procedure Code Act ["CPA"] and Order 52 Rule 1 and 3 of the Civil Procedure Rules ["CPR"]

30 and sought the following reliefs:

- (a) An order that the 1st Respondent (Applicant herein) gives vacant possession of property comprised in Kibuga Block 38 Plot 537 at Wandegeya. - (b)In the event that the 1st Respondent (Applicant herein) declines to voluntarily give vacant possession of the suit property, an order be issued for eviction of the 1st 35 Respondent and all its tenants occupying the suit property.

- 5 (c) An order vacating the caveat under instrument number KCCA-00089489 lodged by the 2nd Respondent on the suit property on 10th March 2022. - (d) Costs of this application be provided for.

In that Application, the Applicant contended that a property described as Kibuga Block 38 10 Plot 537 ["the suit property"] was initially owned by the Late Musa Ssebaduka. The property was transferred to Emmanuel Kisembo who later transferred it to the Applicant. The Applicant mortgaged the property to the Respondent as security for a loan which it eventually defaulted on. As a result, the Applicant filed HCCS 66/2012 before this court accusing the Respondent of breach of contract and contending that the mortgage deed 15 between the parties was unenforceable.

Judgment was entered in favour of the Respondent and the Applicant was directed to pay UGX 476,381,200 to the Respondent. As a result, the Applicant and Respondent sold the suit property to a one David Kageruka for UGX 560,000,000 with the Applicant receiving UGX 20 460,000,000 and the 1st Respondent UGX 100,000,000. The Respondent herein contended that after the sale, it failed to obtain quiet posessesion and brought the said application for the reliefs sought.

This court heard and determined that Applicant, issuing the following orders:

- 25 (a) An order that the 1st Respondent (Applicant herein) gives vacant possession of property comprised in Kibuga Block 38 Plot 537 at Wandegeya within sixty (60) days from the date of the ruling. - (b)In the event that the 1st Respondent (Applicant herein) declines to voluntarily give vacant possession of the suit property, an order is issued for eviction of the 1st 30 Respondent and all its tenants occupying the suit property. - (c) Before evicting the tenants of the 1st Respondent, (Applicant herein) the Applicant (Respondent herein) shall serve on all tenants a thirty-day notice of eviction and no eviction shall be conducted except after the expiry of thirty days from the date of the notice.

- 5 (d) An order vacating the caveat under instrument number KCCA-00089489 lodged by the 2nd Respondent on the suit property on 10th March 2022. - (e) The Applicant was also awarded costs of this application. Each Respondent will bear half of the applicants' costs for the application.

## 10 *The Present Application*

In the present Application, the Applicant seeks the following reliefs:

1. Execution of the orders in Miscellaneous Application No. 724/2023 be stayed pending the hearing and final determination of Civil Suit 1364/2024.

2. Costs of this application be order to be in the cause.

Briefly, the Applicant's case in this application is that it is the registered proprietor of land described as Kibuga Block 38 Plot 537 at Wandegeya ["the suit property"] which is the subject of the orders in HCMA 724/2023. The Applicant contends that it obtained credit faculities secured by the suit land. The Applicant contends that the Respondent breached the 20 credit facility agreement prompting it to file Civil Suit 66/2012 which was determined and an appeal against the decision and decree is now pending determination vide Civil Appeal

No. 109/2022.

The Applicant contends that it recently discovered a land purchase agreement by which the 25 Respondent and a one Asiimwe stephen hastily and stealithly successfully hatched a plot and sold the Applicant's suit property to a one David Kageruka without the Applicant's knowledge. The Applicant contends that the Respondent then proceeded to obtain orders for vacant possesion within sixty (60) days vide HCMA 724/2023 which have since elapsed and now the Applicant is under eminent and real threat of eviction from the suit property.

The Applicant contends that it has filed HCCS 1364/2023 Kesacon Services Limited & 2 Ors v Stanbic Bank uganda Limited & Ors now pending before this court before this Honourable Court and among other reliefs seeks prayers challenging the sale of the suit property. The Applicant contends that it shall suffer irreparable loss if the Respondent is allowed by non-

35 grant of this Application to evict her and/or cause transfer of the suit land into the names of


5 the third party to the suit before the conclusion of her civil suit against the Respondent and pending hearing and final determination before this court.

The Applicant contends that the balance of convenience lies in the Applicant's favour who to date is in physical and legal possession of the suit land.

#### *The Respondent's Response*

For the Respondent, this application was opposed. The Respondent contended that

- (1) This application is an abuse of court process because - (a) The Applicant has previously made several attempts to frustrate eviction from the 15 suit property in respect of the order made vide HCMA 724/2023. - (b) This application is res judicata because it raises the same matters as were raised in HCMA 724/2023. - (c) There is no pending appeal against the orders in HCMA 723/2023 to support a stay of execution.

20 (2) The Applicant mortgaged the suit property to the Respondent and defaulted on the same. Consequent to default, the Respondent filed HCCS 66/2012 which was determined in the Respondent's favour with orders that the Applicant pay to the Respondent UGX 47,381,200 with interest at a rate of 7% from 16 September 2012.

- (3)In execution of the above order, the Applicant agreed that the suit property be sold 25 and the same was sold for UGX 560,000,000 of which UGX 100,000,000 was paid to the Applicant as part of the terms of the sale agreement. - (4) Following the sale, the Applicant declined to give vacant possession of the suit property and filed several frivolous suit that sought to set aside the sale of the suit property without appealing the decision in HCCS 66/2012 - 30 (5) Owing to the refusal to grant vacation possession, the Respondent filed HCMA 724/2023 which was determined in its favour. The Respondent further issued to notice to the Applicant to vacate the suit property and it still declined to give vacant possession. Further, the Respondent obtained a warrant of eviction against the Applicant which has since been duly served on the Applicant.

- 5 (6) The Applicant's application is misconceived as there no pending proceedings challenging the said orders evicting the Applicant, that there is no basis to seek orders staying execution of an order of court pending determination of HCCS 1364/2023 as the suit is not yet determined and the grounds set forth in the affidavit in support of the Application relate with applications for interim orders and not an application for 10 stay of execution. - (7) There is no valid grievance by the applicant against the Respondent seeing as the proceeds of the sale were shared with the Respondent and the Applicant has not refunded the same.

#### 15 **Representation**

The Applicant was represented by M/s Olweny Willy & Co. Advocates and M/s Musoke Suleiman & Co. Advocates while the Respondent was represented by M/s MMAKS Advocates.

#### **Evidence and Submissions**

20 The Applicant led evidence by way of an affidavit in support deponed by Ronald Kalema, its director. The Respondents led evidence by way of an affidavit in reply deponed by Andrew Mauso, the Respondent's Head, Legal Credit and Recoveries.

Both Counsel made submissions in support of their respective cases which I have considered 25 before arriving at my decision below. I have however not felt the need to reiterate the same submissions herein.

#### **PART I: DECISION ON PRELIMINARY POINTS OF LAW**

#### *Res Judicata*

- 30 The Respondent contends that this suit is Res Judicata. It contends that the Respondent filed HCMA 724/2023 and the Applicant contested the decision on the basis that it had appealed the decision in HCCS 66/2012 and that the suit property had been sold without the knowledge of the Applicant as the registered proprietor. The Applicant contends that these arguments were heard and at pages 6-7 of the ruling in the above captioned matter, the court - 35 ruled that the suit property was validly with the consent of the Applicant and eviction orders

5 could inspite of the pendency of HCCS 379/2023. The applicant submits that these are the same arguments that are being raised herein.

#### **Section 7** of the Civil Procedure Act provides thus:

"No court shall try any suit or issue in which the matter directly and substantially in issue 10 has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try the subsequent suit or the suit in which the issue has been subsequently raised, and has been heard and finally decided by that court.

Explanation 1. —The expression "former suit" shall denote a suit which has been decided 15 prior to the suit in question whether or not it was instituted prior to it.

- Explanation 2. —For the purposes of this section, the competence of a court shall be determined irrespective of any provision as to right of appeal from the decision of that court. Explanation 3. —The matter above referred to must in the former suit have been alleged by one party and either denied or admitted, expressly or impliedly, by the other. - 20 Explanation 4. —Any matter which might and ought to have been made a ground of defence or attack in the former suit shall be deemed to have been a matter directly and substantially in issue in that suit.

Explanation 5. —Any relief claimed in a suit, which is not expressly granted by the decree, shall, for the purposes of this section, be deemed to have been refused.

25 Explanation 6. —Where persons litigate bona fide in respect of a public right or of a private right claimed in common for themselves and others, all persons interested in that right shall, for the purposes of this section, be deemed to claim under the persons so litigating."

The doctrine of Res Judicata, now codified in Section 7 of the Civil Procedure Act traces its 30 roots from the latin maxim nemo debt bis vexari pro una et eada causa *(No one should be vexed twice for the same cause)*. The position of the law, therefore, is that once a matter has been fairly and correctly tried once, it should not be tried again. Litigation must come to an end.

5 In **Karia and another v. Attorney General and others [2005] 1 EA 83**, the court laid out a three item test to determine whether a matter was res judicata. The test is as below:

(a) There has to be a former suit or issue decided by a competent court

(b) The matter in dispute in the former suit between the parties must also be directly or substantially in dispute between the parties in the suit where the doctrine is pleaded as a bar,

10 and

(c) The parties in the former suit should be the same parties or parties under whom they or any of them claim, litigating under the same title.

In **Boutique Shazim Limited v. Norattam Bhatia & Anor CACA No.36 of 2007** court held 15 that essentially the test to be applied by court to determine the question of res judicata is this: is the plaintiff in the second suit or subsequent action trying to bring before the court, in another way and in the form of a new cause of action which he / she has already put before a court of competent jurisdiction in earlier proceedings and which has been adjudicated upon? If the answer is in the affirmative, the plea of res judicata applies not only to points 20 upon which the first court was actually required to adjudicate but to every point which belonged to the subject matter of litigation and which the parties or their privies exercising

reasonable diligence might have brought forward at the time.

The burden of proving res judicata is on the Respondent who alleges it. See **Onzia Elizabeth**

# 25 **v Shaban Fadul & Anor HCCA 19/2013**

In HCMA 724/2023, the Applicant herein contested the Applicant for eviction orders, contending that the company did not consent to the selling of the property and that as a result, it had filed HCCS 379/2023 challenging the said sale and Civil Appeal 109 of 2022 in

30 respect of which the orders sought would render the suit nugatory.

This court, at page 8 of the ruling of the court in HCMA 724/2023 held thus

"In my view, the allowing of the orders sought against the 1st Respondent would not impede the matters by it because:

- 5 (a) The 1st Respondent is free to pray for preservation/injunctory orders in those matters where a judicial officer handling the same would be able to assess and determine such prayers relative to the justice of the case. - (b) The purchaser of the suit property, who is the beneficiary of the applicant's application is already a party/can be made a party to those proceedings and an order - 10 preventing further transfer of the property can be granted by the applicable court. - (c) If the sale to the purchaser is overturned, the 1st Respondent can have the suit property returned to them. - (d) The suits filed by the 1st Respondent are unlikely to be determined until after a significant period of delay, as evidenced by the ten (10) year delay in Civil Suit 15 379/2013.

# I find myself persuaded by the decisions of the Indian Supreme Court in **Bank of Rajasthan Limited v. VCK Shares & Stock Broking Services Limited CIVIL APPEAL NOS.8972-8973 OF 2014, Indian Bank vs Abs Marine Products Pvt. Ltd Appeal 10074-10075 of 2003**.

20 In this cases, the court found that a party commencing other actions outside of a dispute resolution process aimed at achieving expedited resolution of disputes regarding debts to banks did not prevent or impair proceedings under the expedited process.

In my view, the reliefs sought by the Applicant against the 1st Respondent are not inconsistent 25 and can exist side by side with the 1st Respondent's actions against it."

The present action deals with whether this court ought to grant orders of Stay of Execution of the orders in HCMA 724/2023 pending the determination of HCCS 1364/2023 which challenges the sale of the suit property by the Respondent. Whereas the matters are not

- 30 framed along identical terms, it is my considered opinion that the matters in the present suit are substantially the same such that in the present application, the Applicant is trying to bring before the court, in another way and in the form of a new cause of action which it has already put before a court of competent jurisdiction in earlier proceedings and which has been adjudicated upon. I would accordingly uphold the Respondent's preliminary objection - 35 that this application is Res Judicata and therefore barred by law. - 5 By virtue of my finding on the question of Res Judicata above, it follows that this application wholly fails. However, in the event that my decision above is overturned on appeal, I will provide what would have been my decision on the rest of the matters for determination herein. - 10 Contempt

I have noted that in paragraph 13 of the affidavit in support of the Notice of Motion, the Applicant concedes that it has not complied with the order of this honourable court in HCMA 724/2023. This is also corroborated by the affidavit in reply. I must also note that the ruling in HCMA 724/2023 gave the Applicant sixty days from the date of the ruling to give vacant

possession of the suit property. The ruling was delivered on 12th 15 July 2023. The present application was file on the 19th February 2024 and issued by this court on 6th May 2024.

The meaning of the above is that, by the time this application was filed, the sixty-day period had long expired, and the Applicant had remained in possession for an additional four 20 months and some days before they commenced this application. The Respondent led uncontroverted evidence that an order of eviction was obtained and frustrated by the Applicant.

As a rule, the court will not hear an application for the benefit of a person guilty of civil 25 contempt until they have purged themselves of that contempt. See **Male Mabirizi Kiwanuka v Attorney General CACA 549/2022, Housing Finance Bank Ltd V Edward Musisi CACA 158 of 2020**

In **Kenya Union of Post Primary Teachers & 3 Others v Njeru Kanyamba (2018) eKLR**

30 court held thus:

"In this jurisdiction, this Court has emphasized the sacrosanct nature of the right to be heard in the context of contempt of court applications. Speaking for the majority, Githinji, JA expressed himself as follows in Rose Detho v. Ratilal Automobiles Ltd & 6 Others, CA No. 304 of 2006 (171/2006 UR):

5 "Thus, there is no absolute legal bar to hear a contemnor who has not purged the contempt...and whether the court will hear the contemnor is a matter for the discretion of the court depending on the circumstances of each case."

"The reason why, depending on the circumstances of each case, the court must retain the 10 discretion, albeit to be exercised sparingly, to decline to hear a contemnor is because our entire constitutional edifice is predicated on respect for the rule of law. The moment a party hacks at that foundation, the entire system is threatened."

**In FRED MATIANGI, The Cabinet Secretary, Ministry of Interim and Co-ordination of** 15 **National Government –V- MIGUNA MIGUNA & 4 OTHERS** CIVIL APPLICATION NO. NAI. 1 OF 2017 [2018] eKLR where the Court of Appeal held: -

"In deserving cases, this Court has itself set its face firmly against granting contemnors audience until and unless they first purge their contempt and it shall continue to do so in such cases as evince a headstrong contumaciousness proceeding from a bold impunity, 20 open defiance or cynical disregard for the authority of the Court and the integrity of the judicial system. Such pernicious conduct cannot be countenanced and those hell-bent on it will find neither help, nor refuge under a convenient and self-serving appeal to natural justice when their impudent conduct threatens the very foundation of the rule of law. While the right to fair hearing is sacrosanct and is one of the non-derogable rights 25 in Article 25 of the Constitution, we affirm with this Court in A. B. & ANOTHER vs. R. B. 2016 eKLR that there may be instances where due to the risk of the rule of law being deliberately undermined, such right may be denied and the hearing of an application for stay denied until there is full compliance with the orders of the High Court."

30 Generally, where contempt of court allegations are raised, the same ought to be resolved before any other business is conducted, such that the contemnor is either punished, purges themselves of contempt or the court makes orders as are just in the circumstances. Once an application for contempt was made, the court should have decided the same before proceeding with any other applications between the parties. See **Trust Bank Limited v**

## 5 **Shanzu Villas Limited (2004) 2 KLR 299, Nation Media Group v Child Welfare Society of Kenya [2021] Eklr**

**In Kasturilal Laroya v Mityana Staple Cotton Co Ltd & Another (1958) E. A. 194** the court declined to refuse to grant audience to persons accused of contempt. In my view, in such 10 circumstances the court has discretion to (a) decline audience, (b) stay proceedings until determination of contempt by way of a formal application and (c) to allow audience and reserve the issues of contempt to another application.

In **Aya Investments Limited v International Development Corporation Of South Africa**

- 15 **HCMA 3063/2023** this court held that where a party was in contempt and the contempt was subject to court process (such as by way of a suit) which had not been resolved, the court could hear the contemnor's application and leave the issue of contempt for the determination of the court and judicial officer before whom the application/proceedings seeking to punish the alleged contempt were. - 20

It is not in dispute that the applicant was in contempt of the orders of this court at least until they filed this application.

In **Betty Kizito v Dickson Nsubuga & Ors SCCA 25/26 of 2021**, the Supreme Court noted 25 that although in civil matters civil proceedings are typically originated by parties to litigation, that doesn't make them parties to the proceedings but only assist the court by bringing its attention to the contempt. In this case, while matter was never flagged by the Respondent, it is no less relevant to identify and deal with it.

- 30 Contempt of court is a serious misdeed that not only mocks the authority of the court, hinders administration of justice but also has the effect of impeaching the credibility and authority of the courts and the confidence of the public in them, which can result into a breakdown of rule of law. Accordingly, the court is empowered to deny audience from contemnors since parties who participate in flouting court orders cannot in the same breach approach the - 35 court seeking reliefs/orders from the court. That is further extending the mockery of court

## 5 that is contempt. See **Male Mabirizi v Attorney General CACA 549/2022**, **Attorney General v Male Mabirizi HCMA 843/2023**

Unlike the above referenced cases, there isnt a separate application for contempt of court which would be basis for urging the court to hear the applicant as the contempt matter is

10 resolved in the separate application. Accordingly, in light of the applicant's contempt, this court cannot hear him before he purges himself of that contempt and it would follow that this application would stand dismissed.

Since this court is empowered to sanction a party, it is important that the court considers an 15 appropriate sanction to the applicant. Before this, the applicant must be heard on the sanction before any such sanction is placed on him. Accordingly, this court will fix this matter for hearing on the issue of contempt before it imposes a sanction which the applicant must oblige with before it can be considered to have purged itself of contempt.

## 20 **PART II: WOULD BE DECISION ON THE MERITS OF THE APPLICATION**

**Order 22 Rule 26** of the CPR provides thus:

"Where a suit is pending in any court against the holder of a decree of the court in the name of the person against whom the decree was passed, the court may, on such terms as to security or otherwise, as it thinks fit, stay execution of the decree until the pending 25 suit has been decided."

The import of the above rule is that where a suit is pending in the same or another court against the holder of the decree by the judgment debtor, the court may exercise its discretion to stay the execution of the decree until the second suit is determined. See Dr. Dani Joackin v

30 Eng. Lodu Julius HCMA 610/2023

The above rule is applicable in two contexts

- (a) Where a judgment creditor has another suit against the judgment pending determination and it in the interests of justice that execution in the first suit should 35 be stayed, such as where the determination of the second suit would create a right to

- 5 set off. See **Nelson Lukozi v Meera Investments & Ors HCMA 1970/2023, Beeline Travel Care & Anor v Finance Trust Bank Limited HCMA 296/2023** - (b) Where there is an appeal against a decision of the High Court and an applicant seeks to make an application for stay of execution in the High Court pending an appeal to the Court of Appeal. See **UMEME v Irene Nankabirwa HCMA 154/2021, Peter** 10 **Mulira v Mitchell Cotts HCMA 715 of 2009, Rebecca Nabunya Iga v Senteza Kabali Bunya HCMA 948 of 2020**

Clearly, instance (b) is not available in the present circumstances as there is no appeal referenced by the applicant in respect of which these proceedings should be stayed. The 15 Applicant instead references a suit pending in this court.

The thrust of the Applicant's application is that it is challenging the sale of the property in respect of which the Respondent seeks to evict it and put the vendor in possession and as a result of which the Applicant's suit would be rendered nugatory.

Having reviewed the Applicant's application, I find that this is not a proper case for grant of stay of execution as prayed for because:

- 1. The decision of the court so enforced is not a decree and accordingly, the provisions of Order 22 Rule 26 are clearly not applicable as correctly noted by counsel for the 25 Respondent. - 2. This court notes that that a party proceeding under the wrong law is not fatal as long as jurisdiction exists. See **Gids Consults Limited & Anor v Naren Mehta HCMA 864/2022, Saggu v Roadmaster Cycles Ltd 2002 1 EA 258, Cwezi Properties v UDB HCMA 1315 of 2022**. Therefore, even if the Applicant could be said to be making 30 the present application under this court's inherent powers to grant such reliefs enshrined in Section 33 of the Judicature Act and Section 98 of the Civil Procedure Act, this court would still decline this application because: - (a) The Applicant's affidavit does not reveal what unique harm allowing the enforcement of the decision of the court will subject to him or his suit. In my 35 considered view, since the Applicant's case in Civil Suit 1364/2024 is that the

- 5 purchaser, Asiimwe Steven connived with the Applicant and others to obtain the suit land, it would follow that a determination in favour of the Applicant would collapse the transaction to this purchaser and re-vest the property in the Applicant. - (b) Additionally, the Applicant has not demonstrated that allowing the enforcement 10 of the orders of the court would subject him to harm that is not capable of atonement in money. Indeed, the Applicant as relief (c) pleaded for general damages intimating that the harm complained of is capably compensated by monetary relief. - (c) Seeing as the purchaser is a party to HCCS 1364/2024, the Applicant can seek and 15 potentially obtain reliefs preventing encumbering or transfer of the suit land pending the determination of the suit so that the suit property is not transferred to persons whose title would not be impeachable. - (d)In my considered view, the interests of justice in this case favour the enforcement of a decision of the court as opposed to the staying on the same on account of a 20 claim which, as we speak has not been established. This is more so where the Applicant has not established the uniqueness of this property that makes it incapable of the compensatory reliefs which court can give or how the enforcement of the decision of the court would render the Applicant's suit moot. In my considered view, the Applicant's existing suit in respect of which this stay is 25 sought seeks to establish its rights in the property which would not be in any way negated by enforcing the order of the court.

Accordingly, I find that this is not a deserving case for exercise of the powers conferred on this court under Order 22 Rule 26.

Conclusion

In the premises, this court makes the following orders

- 1. This application is res judicata and accordingly, the same is dismissed. - 2. This matter is fixed for hearing on the issue of the sanction for contempt on 19th of - 35 August 2024 and a hearing notice in respect of the same shall be issued in **ECCMIS**.

5 3. The Applicant shall bear the costs of this application.

I so order.

**Dated** this\_\_\_\_\_\_\_ day of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_2024, delivered electronically and uploaded on 23rd July

10 **ECCMIS.**

**Ocaya Thomas O. R**

15 **Judge**

**23rd July 2024**

20