Nyamarere & 3 Others v Okumu & 6 Others (Civil Application 35 of 2020) [2021] UGSC 52 (20 August 2021)

# THE REPUBLIC OF UGANDA

# IN THE SUPREME COURT OF UGANDA AT KAMPALA

**CIVIL APPLICATION NO 35 OF 2020**

(Arising from Civil Appeal No. 18 of 2020)

#### **BETWEEN**


(An application for security for costs arising out of Civil Appeal No.18 of 2020 between the same parties)

## RULING OF JUSTICE ARACH-AMOKO, JSC

This Ruling arises out of an application filed on the 19<sup>th</sup> October 2020 by Paul Nyamarere, Henry Kyambadde, John Walugo and M/S Byashasha & Co. Advocates, (hereinafter referred to as "the 30

- applicants") under Rules 101(3) and 42 of the Supreme Court Rules $\mathsf{S}$ for orders that the respondents furnish: - (a) Further security for costs in this Court; and - (b)Security for payment of past costs awarded to them by the High Court and the Court of Appeal. - The applicants also pray that the costs of the application be provided 10 for.

## **Grounds**

The application is supported by two affidavits dated the 15<sup>th</sup> October, 2020 sworn by the $2^{nd}$ and $3^{rd}$ applicants, respectively. It is premised

on the grounds that: 15

- $I.$ The applicants are being put to undue expense of defending a civil appeal which has no reasonable prospects of success. - II. The respondents' Civil Appeal No. 18 of 2020 has no reasonable prospect of success, is moot and an abuse of 20 the court process. - III. The respondents have no known assets and/or source of income from which a successful party can recover costs. - IV. The respondents filed Civil Suit No. 49 of 2014 in the High Court and the same was dismissed with costs. Their 25 appeal to the Court of Appeal vide Civil Appeal No.28 of 2017, was also dismissed.

$\mathsf{Z}$

- Both the High Court and the Court of Appeal found that $5$ V. filing Civil Suit No. 49 of 2014 in the High Court from which Civil Appeal No. 18 of 2020 in this Court emanated was incompetent and amounted to abuse of Court process. - The applicants' costs at the High Court were taxed, the VI. award was appealed and confirmed, but the respondents 10 have not yet paid the said costs to the applicants. - $VII$ . The applicants have also filed their Bill of costs in the Court of Appeal and it is pending taxation. - $V\!I\!I\!I.$ In the circumstances, it is just and equitable that this Court orders the respondents to furnish further security 15 for costs and past costs before the Court proceeds to hear Civil Appeal No. 18 of 2020. - $IX.$ The applicants are facing gross injustice due to the continuous litigation and abuse of Court process.

The case for the respondents 20

> It is important to note from the outset that the following respondents have withdrawn their appeals under Rule 90 of the Supreme Court Rules:

- 1. Joseph Henry Ndaula - 2. Stephen Mukasa 25 - 3. Stephen Epilu - 4. Mary Wacha; and - 5. Oyela Rose

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- The remaining respondents are; 5 - 1. Dison Okumu - 2. Edward Rubanga; and - 3. Mubiru Frederick

The respondents opposed the application through the replying affidavit of Edward Rubanga, who deposed that the applicants' 10 application is tantamount to inviting this Court to sit as an execution court and to stifle their right of appeal. It is thus incompetent and ought to be dismissed.

#### The background

- From the documents on record, the brief background to the 15 application is as follows: The respondents filed in the High Court by way of a plaint, High Court Civil Suit No.49 of 2014 against the applicants and 4 Others, seeking to set aside various orders of the High Court in Misc. Application No.234 of 2012; Misc. Cause - No.272 of 2012; and a Decree of the High Court in the case of 20 Henry Kyambadde & Others vs Attorney General, UETCL & Others, HCCS No.138 of 2008.

At the commencement of the hearing, counsel for the applicants raised preliminary objections regarding the competence of High **Court Civil Suit No.49 of 2014** to the effect that:

- The suit was brought under the wrong procedure, the $i.$ respondents should have applied for review of the High Court decisions or appealed, instead of a suit by way of a plaint; - The respondents had no locus standi to institute the suit since ii. they were part of the group who had previously authorized the

- applicants to file a representative action against the Attorney General, UETCL & Others; - The suit was res judicata since it raised the same issues that iii. had been determined by the High Court between the same parties; and - The suit sought to deny 1,500 pensioners their entitlements iv. 10 without being given a right to be heard since they are not parties thereto.

Counsel for the respondents opposed the objections but the learned trial Judge upheld the preliminary objections and dismissed High

Court Civil Suit No.49 of 2014 with costs to the applicants. 15

The respondents appeal vide **Court of Appeal Civil Appeal No.28 of** 2017 was dismissed by the Court of Appeal with costs to the applicants.

The respondents have appealed to this Court vide **Supreme Court**

Civil Appeal No. 18 of 2020, which is pending before the Court. 20 Hence this application.

## **Representation**

$\mathsf{S}$

Learned counsel Mpumwire Abraham and Ronald Tumusiime represented the applicants while learned counsel Bazira Anthony appeared for the respondents.

## **Submissions**

Both parties filed written submissions and Court allowed them to make brief oral highlights at the hearing. I have carefully read the Notice of Motion, the respective affidavits and considered the

submissions by counsel, the relevant law and read the authorities $\mathsf{S}$ relied upon and I shall refer to them in reaching the decision in the application.

## The legal provisions for security for costs.

Rule 101(3) gives this Court discretionary power to grant the order for security for costs and further security for costs in appropriate civil 10 appeals. It reads as follows:

# "101. Security for costs in civil appeals

$1)...$

$2)...$

3) The court may, at any time, if the court thinks fit, direct 15 that further security for costs may be given and may direct that security be given for past costs relating to the matters in question in the appeal."

The Supreme Court has given guidance on how to exercise this discretion in several cases including the ones cited by counsel for 20 both parties, such as: G. M Combined (U) Ltd, SC Civil Appeal No. 34 of 1995; Noble Builders (U) Ltd and Another vs Sandhu [2004] EA 228; Goodman Agencies, SC Civil Reference No. 01 of 2011, and Kakooza Jonathan & Anor v Kasaala Cooperative Society Ltd SC Civil Application No.13 of 2011 25

In Noble Builders (U) Ltd and Another vs Sandhu (Supra), the Supreme Court held that:

$6$ "The Court may direct the appellant, in appropriate circumstances, to increase the security for costs of the appeal; and $/$ or to deposit security for past or earlier costs. All this tends to portray security for costs in civil appeals as the now rather than the exception."

10 The purpose of an order for security for costs is to protect the defendant from situations in which he is dragged to court and made to lose even the costs of ligation. It is also meant to prevent frivolous and useless litigation. Courts are however required to ensure that parties with just claims are not prevented from accessing the seat of justice for their claims to be determined. 15

$\mathsf{S}$

In the case of **Namboro vs Kaala**, [1975] HCB 315, cited with approval in Kakooza Jonathan & Anor v Kasaala Coperative Society Ltd, Sekandi Ag. J., as he then was, held that the main considerations to be taken into account for security for costs are (a) whether the applicant is being put to undue expenses by defending 20 a frivolous and vexatious suit. (b) Whether he has a good defence to the suit and is likely to succeed and (c) that mere poverty of the plaintiff is not by itself a ground for ordering security for costs or if it were so, poor litigants would be deterred from enforcing their legitimate right through the legal process. 25

The power to order for security for costs must be sparingly used. [See: UCB v Multi Constructors Ltd Civil Appeal No. 29 of 1994. (Unreported)]

As for the burden of proof, in Noble Builders (U) Ltd and Another **vs Sandhu** (supra), the Supreme Court held that: 30

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"It is well settled that the burden lies on the applicant to show sufficient cause why the appellant should furnish further security for costs over and above the amount fixed by the rules. What amounts to sufficient cause is a matter for the Court's discretion, depending on the circumstances of the case before it."

$\overline{5}$

## Consideration of the application

The main issue for determination is whether the applicants have made out a case for granting the orders sought.

- The main reason for the application is that the applicants were awarded costs in the High Court and the Court of Appeal which 15 remain unpaid, yet they are being put to undue expenses to defend Supreme Court Civil Appeal No. 18 of 2020 which has no likelihood of success. They further contend that the respondents have no specific addresses and /or sufficient assets to meet their obligations in the event that the appeal is determined in their favour. They also 20 argue that the shs. 400,000 deposited by the respondents in Court under Rule 101 of the Supreme Court Rules is inadequate and unrealistic in the current circumstances since that Rule was fixed by the Rules Committee way back in 1996. - The respondents' first basis for opposing the application is the 25 contention that the application for security for costs is premature since the applicants have not exhausted all the remedies available to them before resorting to security for costs. By "all the remedies available", the respondents contend that the applicants ought to have carried out execution proceedings or taken out essential steps 30

to recover costs before applying for security for costs or further 5 security for costs.

The second basis on which the respondents urged Court to dismiss the application is that it does not meet the parameters for the grant of security for costs. This is because (a) the respondents' appeal raises a number of legal and evidential issues that require determination by this Court; and (b) availability of assets or known address by the respondents is not the overriding factor that Court must consider before grating an order for security for costs.

The applicants maintain their position in their brief rejoinder. Counsel contended that the security for costs is paid in court, not to 15 the applicants. Therefore, it cannot be equated to execution proceedings. That this Court has power to order security for costs under Rule 101 of the Rules of the Court in appropriate cases.

- From perusal of the record before court and circumstances of this appeal, I find that the application is not premature. The respondents' 20 case was dismissed by two lower courts on preliminary objections indicated herein after giving sound reasons. Besides, the appeal raises the same legal issues indicated herein that the two courts have ruled on. These are not novel points of law. - I also note that most of the respondents have since withdrawn from 25 the appeal by filing Notices of Withdrawal under Rule 90 of the Supreme Court Rules, leaving three of their colleagues.

The foregoing raise a prima facie case of the difficulty regarding the success of the appeal, in my judgment. This Court should not, however, dismiss it outright, without hearing the respondents out,

since the appeal involves colossal sums of money. There is, on the $\mathsf{S}$ other hand the duty of this Court to balance the interest of the applicants with that of the respondents.

I further note that the respondents have not controverted the averment by the applicants that they have no known address and/ or assets from which the applicants can recover the costs of the 10 litigation, if the appeal fails. The affidavit of Mr. Rubanga is vague. He simply stated as follows:

> "18. That in reply to paragraph 17 and 18, I am advised by my lawyers, whose advice I verily believe to be true that the *Applicants have not shown demonstrable lack of a known address by the Respondent."*

In Goodman Agencies, SC Civil Reference No. 01 of 2011, relied on by the applicants' counsel, in a unanimous decision of three Justices led by Tsekooko JSC, as he then was, the Court stated that:

- "If the respondent has neither a known address nor any 20 apparent asset from which the litigant can recover costs. it is the more necessary that a sure way of recovery of costs must be guaranteed. The principle of requiring appellants to provide costs is old and has a basis in reason. - ... With the greatest respect to the learned single Judge, it 25 is our opinion that he erred when he held that to order security for costs amounts to denial of justice."

In that case, the Court also acknowledged the fact that the shs.400, 000. Security for costs in Rule 101 had become inadequate since the value of the shilling had changed enormously. The ordered the 30

respondent to deposit shs. 200 million within forty five days from the $\mathsf{S}$ date of the Ruling.

In G. M Combined (U) Ltd, SC Civil Appeal No. 34 of 1995, Oder JSC, as he then was, ordered the appellant to deposit security for costs in the sum of shs. 30 million before proceeding with the case.

- It is therefore not true that the order for security for costs amounts 10 to execution proceedings. As counsel for the applicants argued rightly, the funds are deposited in court and the respondents can recover them if they are successful in their appeal. It is intended to secure the costs of the litigation by a defendant in the lower courts 15 - or a respondent in the case of appeals and to discourage frivolous and vexatious litigation.

For the reasons above, I find that the applicants have made out the case for the grant of the order sought. I accordingly grant the application and order as follows:

- 1. The respondents shall deposit shs. 30,000,000 (Thirty million 20 shillings) as security for costs within 45 days from the date of this order. - 2. If the respondents do not comply with order No. 1, Supreme Court Civil Appeal No. 18 of 2020 shall lapse forthwith. - 3. The respondents shall bear the cost of this application in any 25 event.

20<sup>th</sup><br>Day of Amis. T....2021 Dated at Kampala this...


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