Luzige and 4 Others v Afriland Bank Uganda Limited (In liquidation ) (Miscellaneous Application 748 of 2022) [2023] UGCA 279 (23 March 2023)

Full Case Text

### THE REPUBLIC OF UGANDA

# IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

Miscellaneous Application No. 748 of 2022

(Arising from Civil Appeal No. 29 of 2018)

(all arising from Taxation Appeal No. 02 of 2022)

## **BETWEEN**

| Joseph Luzige | Applicant No.1 | |--------------------------------------------|------------------| | Kavuma Isa- | Applicant No.2 | | Lubega Achilles= | =Applicant No. 3 | | T/A Luzige, Lubega, Kavuma & Co. Advocates | |

AND

Afriland Bank (U) LTD. (In Liquidation) =

Respondent

# RULING OF FREDRICK EGONDA-NTENDE, JA

### Introduction

$\lbrack 1 \rbrack$ The applicants are seeking an order of this court to stay execution of the orders of the High Court in Taxation Appeal No. 002 of 20222 pending determination of Civil Appeal No. 343 of 2022 and costs of the Application. This application is stated to be made under Rules 2(2), 6(2)(b), 42 and 43 of the Court of Appeal Rules) Directions S. I 13-10). The grounds for this application are set out in the affidavit of Mr Joseph Luzige which states in part as under;

> \*8. That on 6th April, 20220, we filed a Notice of Appeal and letter requesting for the record of proceedings and the Judgment in taxation Appeal No. 02 of 2022 which were subsequently served on the Respondent. (A copy of the Notice of Appeal and letter are attached as annexure "C")

That the Appeal has been filed in the Registry of the executing Court Vide Civil Appeal No. 0343 of 2022 challenging the decision of the High Court and the same has high chances of success.

10. That on 17th May, 2022, the respondent commenced the process of executing the orders of High Court by filing a Bill of Costs and fixing the same for taxation in order to implement the Judgment and orders issued against us. (A copy of the Respondent Bill of Costs and Taxation Hearing Notice is attached as annexure $("G"$

11. That on 25th May, 2022, the respondent went into liquidation and a one Zulaika M. Kasajja was appointed by the High Court as the Liquidator of the Respondent. (A copy of the letter from Bank of Uganda is attached as annexure "E")

12. That we filed Miscellaneous Application No. 1034 of 2022 for stay of execution of the orders of the High Court in Taxation Appeal No. 002 of 2022 and the same was dismissed on 13th October, 2022 on the ground that there was no serious threat of execution. (A copy is attached as annexure "E")

That the Liquidator of the respondent wrote to us to the effect that our claim for legal fees shall not be considered in the liquidation process basing on the Judgment in Taxation Appeal No. 002 of 2022 which is the subject of Civil Appeal No. 343 of 2022 from which this Application arise.

14. That the respondent is a foreign company and if this Application is not granted and execution takes place, the respondent will soon leave the country and recovery by the Applicant will be difficult if the Appeal succeeds.

15. That the Respondent being in liquidation will not be prejudiced if this application is granted and if execution is stayed as prayed.

That if this Application is not granted, Civil Appeal No. 343 of 2022 shall be rendered nugatory.

The respondent opposes the application and Ms. Zulaika M. Kasajja the liquidator of the respondent filed an affidavit in reply. The respondent's affidavit states in part as follows:

> \*3. That I have been advised by our lawyer, which advise I verily believed to be true, that the instant application and the affidavit of Joseph Luzige in support of the instant application is premature, incurably defective, baseless, without merit and an abuse of court process.

> 4. That I know the Applicants prepared an Advocate Client Bill of Costs and subsequently served the same upon the Respondents. That upon expiry of the thirty-day statutory period, the same upon the applicants applied for leave to have the bill costs taxed against the respondent and Afriland First Group SA vide Miscellaneous Cause No. 63 of 2021.

> That on 11th November, 2023, the abovementioned matters came up for hearing before the Hon. Justice Stephen Mubiru of High Court (Commercial Division). The learned trial judge granted the applicants leave to tax the Advocate-Client bill of costs as against the respondent, dismissed the orders and declarations sought. Furthermore, the leaned trial judge struck off Afriland First SA (the 2nd Respondent therein) for want of service. (A copy of the proceedings is attached as annexure "A").

> 6. That when the matter came up for taxation before the Registrar, His Worship E. Kisawuzi, the respondent raised preliminary objections regarding the Bill of Costs. In his ruling delivered on 16th December, 2021, the learned Registrar overruled the respondent objections and directed the taxation of the applicants bill of costs to proceed. (A copy of the ruling is attached as annexure "B").

> That the respondent being dissatisfied with the decision of the Registrar, filed Taxation Appeal No. 02 of 2022 and M. A 109 of 2022 for stay of taxation proceedings pending disposal of Taxation Appeal No. 02 of 2022.

[2]

That court in its ruling delivered 4th April, 2022 allowed the respondent's Appeal with costs for Taxation Appeal No. 02 of 2022 and M. A 0063 of 2021.

12. That I have been advised by our lawyers, which advice believe to be true, that Misc. Cause 63 of 2021 and Taxation Appeal No. 02 of 2022 were both determined on points of law and fact and on that basis, the Applicants' appeal has no chances of success.

13. That I strongly believe that the instant application is intended to delay payment of the respondent taxed costs arising from the aforementioned suits.

14. That in response to paragraph 9 the affidavit of Joseph Luzige. I know that the Applicant's appeal has no chances of success.

15. That in response to paragraph 9 of the affidavit of Joseph Luzige, I know that the applicants have not shown imminent threat or danger of execution against them by the respondent. The Applicants herein do not seek a stay of execution but rather stay taxation proceedings.

16. In further response to paragraph 9, I know taxation of the Respondent's Bill of Costs is purely a procedural matter and not a mode of execution against the applicants either as alleged or at all.

17. That in further response to paragraph 12 of the affidavit of Joseph Luzige, Miscellaneous Application No. 1034 of 2022 was not dismissed on the ground that there was a serious threat of execution but rather on a point law that there was no justification to stay the taxation proceedings.

18. That in response to paragraph 14 of the affidavit of Joseph Luzige, the respondent is not a foreign company neither as alleged by the applicants or at all.

19. That in response to paragraph 15 of the affidavit of Joseph Luzige, the respondent will be prejudiced by stay of proceedings as the respondent, being the successful litigant is entitled to reap the fruits of judgment.

20. That in further response to paragraph 16, 17 and 18 of the affidavit of Joseph Luzige, I know that the Applicants have not shown this Court how they will suffer irreparable damage or substantial injury in the event the Respondents bill of costs is taxed.

21. That I know that the interest of justice and the balance of convenience in this case lies in favour of the respondent and in any case, the instant application is premature and speculative of the taxation.

22. That I know the applicants have not provided for the performance of the order and are already in the process of frustrating the taxation of the Respondent's Costs. That I verily believe there is no appeal whatsoever and that this application is devoid of any merit or valid points of law.

#### **Legal Representation**

Mr. Segamwenge Hudson appeared for the applicants while the respondent $[3]$ was represented by Mr. Rayner Mugyezi.

#### **Analysis**

Rule 6 (b) of the Judicature (Court of Appeal Rules) Directions SI 13-10 $[4]$ provides:

> 'in any civil proceedings, where a notice of appeal has been lodged in accordance with rule 76 of these Rules, order a stay of execution, an injunction, or a stay of proceedings on such terms as the court may think just."

In Sekikubo and 3 Others v Attorney General and 4 Others 2013 UGSC 21 $[5]$ the Supreme Court discussed the principles to be taken into while considering an application of this nature and interpreting a similar rule in the Supreme Court Appeal Rules. The Court stated in part,

The law governing grant of a stay of proceedings, an injunction or stay of execution is basically rule 6 (2) (b) of the Rules of this Court. This rule empowers this court, in civil proceedings, where notice of appeal has been lodged in accordance with rule 72 of the Rules of this Court, to order a stay of proceedings, stay of execution or grant an injunction. Clearly this is a discretionary power. Like in all judicial discretion it must be exercised on wellestablished principles.

This Court has in a number of cases laid down principles governing the exercise of the discretion conferred by this rule. In Akankwasa Damian vs. Uganda, Const. Appl. Nos. 7 and 9 of 2011, for instance, the principles were restated as follows.

Applicant must establish that his appeal has likelihood of success; or a prima facie case of his right of appeal.

(2) That the applicant will suffer irreparable damage or that the appeal will be rendered nugatory if a stay is not granted.

(3) If 1-2 above have not been established, Court must consider where the balance of convenience lies.

We should add that another principle is that the applicant must also establish that the application was instituted without delay."

- The foregoing principles will guide my approach to determining this $[6]$ application. - The applicants assert that they filed Civil Appeal No 002 of 2022 challenging $[7]$ the decision of High Court. Upon perusing the evidence on record, there is no doubt a Notice of Appeal was filed and served on the respondent. I take it that this was timeously done. - The applicants attached a copy of the Judgment of the High Court that they [8] intend to appeal against but have not furnished a record of appeal or a memorandum of appeal upon which I may be able to evaluate whether or not

the intended appeal is arguable. What I can gather from the judgment of the trial court is that it concerns pre incorporation agreements and whether or not they bind the promoters or the company. What is clear is that the respondent was not party to the said agreement and did not instruct the applicants in relation to the same. It is questionable whether or not it should be enforced against the respondent. However, that is a matter that will be determined by the Court of Appeal.

- The applicants contend that they will suffer irreparable harm and substantial $[9]$ loss if execution were to go ahead but this is just regurgitated in the supporting affidavit without any proof of what that harm will be. See Paragraph 16 of the affidavit of Mr Joseph Luzige. '16. That we shall suffer irreparable damage and or substantial loss if this application is not granted.' No particulars of damage or loss are provided or explained. - [10] Likewise, on the ground that their appeal will be rendered nugatory if this application is not granted this is just regurgitated without more. See paragraph 17 of the affidavit of Mr Luzige. 'That if this application is not granted, Civil appeal No. 0343 of 2022 shall be rendered nugatory." - [11] No proof is offered to back this claim. Just as no proof is offered to support the claim that the respondent is a foreign company. This claim is clearly false given that the company is actually in liquidation in Uganda and was incorporated in Uganda. The applicant was instructed to incorporate it in Uganda which they did and had been paid fees for doing so. What gives rise to the proceedings between the parties is the contention by the applicant that they were not paid fees for obtaining a banking licence. - [12] The claim therefore that the respondent is a foreign company is simply false. Its members may have been foreign entities but that is not in issue here. It is not a foreign company. It is a company incorporated here and it is currently under liquidation. This in itself does not render an appeal nugatory. The applicants can proceed against the liquidator for any outstanding liabilities against the company.

- No certification of taxation of the impugned bill of costs was availed to this $[13]$ court. From the statements of counsel at the bar it is clear that all the parties were dissatisfied with the proceedings. Whatever orders were made on the taxation of the impugned bill of costs are the subject of further proceedings by at least the respondent. Applicant's counsel by his own admission walked out of the proceedings before the Registrar of the High Court during taxation of the respondent's bill of costs. - There is simply no threat of execution to recover those costs by the respondent $[14]$ at this stage. - I am satisfied that the applicants have failed to establish the necessary grounds $[15]$ upon which this court can exercise its discretion to allow this application.

### Decision

This application is dismissed with costs. [16]

Signed, dated and delivered at Kampala this 23rdday of

Shing Sin Juni Fredrick Egonda-Ntende

Justice of the Court of Appeal