Mugisha v KCB Bank Uganda Limited (Miscellaneous Application 173 of 2023) [2023] UGCommC 254 (15 September 2023)

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION)

#### MISC. APPLICATION NO. 173 OF 2023

MUGISHA JUSTUS BAKETUNGA::::::::::::::::::::::::::::::::::::

#### **VERSUS**

KCB BANK UGANDA LTD::::::::::::::::::::::::::::::::::::

#### **BEFORE: HON. LADY JUSTICE ANNA B. MUGENYI**

#### **RULING**

This Application is brought by way of Chamber Summons under Order 22 Rules 23(1),89(1), Order 43 Rules 3 & 4 of the Civil Procedure Rules SI 71-1, Sections 33 & 38 of the Judicature Act (Cap 13) and Article 126 of the 1995 Uganda Constitution for orders that Court grants a stay of execution pending the hearing of the Appeal before the Court of Appeal, the Order staying execution shall remain in force until the final determination of the Appeal pending before the Court of Appeal and costs of the application be provided for.

The Application was supported by the Affidavit of Mr. Mugisha Justus Baketunga, the Applicant in this case. The Application was opposed by the Affidavit in reply of Joseph Kuteesa an Advocate practicing with KSMO Advocates.

#### **BACKGROUND**

The Applicant filed HCCS No. 935 of 2016 against the Respondent. Judgment was entered for the Respondent with a bill of cost taxed at 21, 026, 000. The Applicant dissatisfied with the judgment delivered on the 23<sup>rd</sup> of August 2022 and the decree issued on 20<sup>th</sup> of September 2022 filed a Notice of Appeal against the whole of the said decision on $6<sup>th</sup>$ of October 2022.

The Respondent made an Application for execution of the decree on the 13<sup>th</sup> of December 2022 and the Applicant was served with a Notice to show cause why execution should not issue on the 19<sup>th</sup> of January 2023.

The Applicants thus filed this Application for stay of execution pending Appeal

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#### **REPRESENTATION**

The Applicant was represented by M/s Jason & Co. Advocates and the Respondent was represented by M/s KSMO Advocates.

### **SUBMISSIONS**

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> Counsel for the Applicant submitted that they filed an Application for an order for stay of execution and that the Applicant has grounds for the grant of the said order. She stated that the Applicant filed a notice of Appeal and is willing to furnish 20% of the costs as security for performance. She submitted that if this Application is not granted the Applicant will suffer substantial loss because he is a businessman and is currently unable to obtain any loan facility from any bank as a result of the overdraft loan the Respondent issued to him without his consent and the Respondent's report to M/s Compusan Credit Reference Bureau about his failure to pay the said liability. Counsel stated that if this Application is not granted, the Applicant faces a high risk of loss of reputation and failure to obtain any other credit facilities from financial institutions.

> Counsel for the Respondent, in reply, submitted that Applications of this nature are governed under Order 43 rule 4(2) & (3) of the Civil Procedure Rules and that it is imperative that an Applicant who seeks to stay execution pending appeal complies with the grounds therein since this Order is couched in mandatory terms.

> Counsel submitted that much as the Applicant alleges that he is willing to furnish security, there is no proof of the said being deposited anywhere. Further, that the Applicant filed a Notice of Appeal in 2022 but to date there is no appeal and neither have the record of proceedings being obtained. Counsel submitted that the Applicant reached out to the Respondent at one point to have a repayment plan of the costs but has adamantly refused to pay the same; that a Notice of Appeal is not an Appeal and has to be subsequently followed by an actual Appeal and that the Application may be a ploy by the Applicant to obtain an order for stay of execution and never follow through with the Appeal.

> He submitted that by the Applicant's non-compliance with Order 43 rule $4(2)$ & (3) of the CPR i.e. not furnishing security for due performance of the decree, this application for stay of execution should be dismissed with costs.

> Counsel for the Respondent submitted that in the alternative, the Applicant should deposit 70% of the taxed cost within two weeks which will provide certainty that the actual appeal will be followed up given the Applicant's previous conduct.

Counsel for the Applicant, in response, submitted that the prayer for the Respondent's Counsel that the Applicant pays 70% of the taxed costs will dispose of the appeal because if that percentage of costs is paid, the Appeal will be rendered nugatory as what will be left to be paid is meager.

### **RULING**

I have read and considered the pleadings and submissions of the parties in this matter and the main Issue for determination by this Court is whether this is a proper case for an order for stay of execution pending Appeal to be issued.

The spirit behind Courts granting a stay of execution pending an appeal was discussed in the case of Lawrence Musiitwa v Itobu Margret HCMA No.0160 of 2022, where it was held that an Application for stay of execution pending an appeal is designed to preserve the subject matter in dispute so that the right of the appellant who is exercising his undoubted rights of appeal are safeguarded and the appeal if successful is not rendered nugatory.

Order 43 rule 4(2) of the Civil Procedure Rules provides that where an application is made for stay of execution of an appealable decree before the expiration of the time allowed for appealing from the decree, the court which passed the decree may on sufficient cause being shown order the execution to be stayed.

Parties seeking for a stay of execution pending appeal should be prepared to meet the conditions set in Order 43 rule 4(3) of the Civil Procedure Rules which provides that:

No order for stay of execution shall be made under subrule (1) or (2) of this rule unless the court making it is satisfied-

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

(b) That the application has been made without unreasonable delay; and

(c) That security has been given by the applicant for the due performance of the decree or order as may ultimately be binding upon him or her.

In the case of Ntege Mayambala v Christopher Mwanje HCMA 72/1991, it was held that all the conditions laid down by order 43 rule 4(3) of the Civil Procedure Rules must be fulfilled before execution can be stayed. The rationale for these conditions is to maintain the status quo and ensure that the purpose of Application is not to defeat justice by delaying tactics and to prove that the Judgement debtor is serious with his application for stay of execution.

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The above conditions for grant of stay of execution were expounded in the case of Hon Theodore Ssekikubo & others v Attorney General & Others Constitutional Application No.03 of 2014 and these include;

- a) The Applicant must show that he lodged a Notice of Appeal - b) That substantial loss may result to the Applicant unless the stay of execution is granted - c) That the Application has been without unreasonable delay - d) The Applicant has given security for due performance of the decree or order as may be ultimately be binding upon them

In the case of Kyambogo University v Prof. Isiah Omolo Ndiege, C. A. C. A No. 341 of 2013 Justice Kakuru observed that in an application for stay, the applicant must prove in addition to other grounds:

- a) That there is a serious and imminent threat of execution of the decree or order and - b) That refusal to grant the stay would inflict greater hardship than it would avoid

Having taken cognizance of the authorities above, I will now proceed to apply the principles therein to the present Application.

# Whether the Applicant has lodged a Notice of Appeal

The Applicant in paragraph 3 of their Affidavit stated that they filed a Notice of Appeal and the same is attached as Annexure C. The Respondent did not dispute this fact but pointed out that the said Notice was filed in October 2022 and has not been followed up by the Applicant to date.

# Whether substantial loss may result to the Applicant if the stay of execution is not granted

The Applicant in paragraph 8 of their Affidavit in support stated that he stands to suffer loss or irreparable loss if execution is not stayed pending hearing of the Appeal. In their submissions Counsel for the Applicant stated that the Applicant being a businessman and currently unable to obtain any loan facility from any bank as a result of being listed as someone who cannot pay their loan faces a high risk of loss of reputation and will not get any business from any credit facility.

In paragraph 6 of the Respondents affidavit in reply, the Respondent stated that the Applicant has not proved substantial loss that is likely to occur if the order for stay is not granted.

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In the case of Tropical Commodities Suppliers Ltd 2 Others v International Credit Bank Ltd (In Liquidation) Misc. Application No. 379 of 2003, the term 'substantial loss' for purposes of stay of execution was described thus:

"Hence, the question needs to be asked as to what in law constitutes "substantial loss". In my view, substantial loss need not be determined by mathematical formula whose computation yields any particular amount. Indeed. Jowitt's Dictionary of English Law (2<sup>nd</sup> Edn.) Vol. 2, p. 1713, carefully defines the analogous concept of "substantial damages" as: "damages which represent actual loss, whether great or small, as opposed to nominal damages..."

Basing on the above case, I agree with counsel for the Respondent that the Applicant has not shown in his affidavit evidence that substantial/actual loss will result to him if the order for stay of execution is not granted.

# Whether the Application has been brought without unreasonable delay

According to the court record, the notice to show cause was served on the Applicant on the 19<sup>th</sup> of January 2023 and he filed this Application on the 19<sup>th</sup> of March 2023. I therefore find that there was no unreasonable delay in filing this Application

## Whether the applicant has given security for due performance of the decree or order:

Order 43 rule $4(3)(c)$ of the Civil Procedure Rules makes it a requirement that a party who is desirous of securing a stay of execution must give security for the due performance of the decree.

The main import of this requirement was stated in the case of Shem Mpanga Mukasa & Anor v Kizza Clessy Barya, Misc. Application No. 479 of 2021 by the Honorable Justice Alexandra Nkonge Rugadya who stated that:

"The payment of security for costs is intended to operate as a shield against the filing of frivolous and vexatious appeals which may never succeed yet have an effect *in escalating trial costs.*"

## Further in the case of Kisaalu Joseph & 10 others v Nakintu May & Anor Misc Application No. 105 of 2020, Honorable Justice Victoria Nakintu added that:

"The condition requiring an applicant to deposit security for due performance is established under Order 43 Rule 4 $(3)(c)$ . Security for due performance has been interpreted to mean the entire decretal sum and it is intended to protect the judgment creditor in the event that the appeal is unsuccessful. Courts though have been reluctant to order security for due performance of the decree.

Rather Courts have been keen to order security for costs because the requirement and insistence on a practice that mandates security for the entire decretal amount is likely to stifle appeals."

Security for costs or due performance of the decree, therefore, operates as an insurance cover that is meant to indemnify the judgment debtor in the event the appeal fails without recourse to vigorous processes of recovering such costs (Wandera Micheal v Baguma Samalie Misc. Application No.36 of 2021)

In this case the Applicant has not deposited any security for costs and no evidence of such deposit can be found on the record of Court. The Applicant in this case filed a Notice of Appeal on the 6<sup>th</sup> of October 2022 and have not filed an Appeal as to date. Though Counsel for the Applicant submitted that the Applicant had failed to obtain the record of proceedings thereby delaying the appeal, she did also admit that what she stated was not in the Applicant's Affidavit. I am therefore inclined to agree with Counsel for the Respondent that such actions by the Applicant point to a ploy to frustrate the Respondent from realizing their costs.

Counsel for the Applicant in her submission from the bar stated that the Applicant is willing to furnish 20% of the taxed costs as security for performance of the decree, but no evidence of such undertaking or deposit is seen on the record. As seen above, deposit of security is meant to operate as a shield against filing frivolous and vexatious appeals and to ensure that a losing party does not intentionally delay execution while hiding under unnecessary applications. The omission by the Applicant of not furnishing any security for costs and the unexplainable delay in filing his appeal for almost a year after filling the Notice of Appeal only serve to confirm the Applicant's attempts to delay execution of the decree in the main suit.

From the foregoing, I find that the Applicant has failed to fulfil all the conditions for grant of stay of execution as provided by law.

This Application is accordingly dismissed with costs to the Respondent.

Dm Bitatie

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HON. LADY JUSTICE ANNA B. MUGENYI DATED...................................