Parambot Breweries Limited (In recievership) v Standard Chartered Bank Uganda Limited and Another (Civil Application 46 of 2022) [2022] UGCA 328 (5 April 2022)

Full Case Text

#### THE REPUBLIC OF UGANDA

## IN THE COURT OF APPEAL OF UGANDA HOLDEN AT KAMPALA

### CIVIL APPLICATION NO. 46 OF 2022

(ARTSTNG OUT OF CIVIL APPLICATTON NO. 45 OF 20221

IARISING FROM C[VIL APPEAL NO. 279 OF 2021]

#### (ARTSING FROM HCMA NO.38O Or 2o2ll

#### (ARTSING FROM HCCS NO. 443 OF 2016)

#### BETWEEN

PARAMBOT BREWERIES LTD (IN RECIEVERSHIP)..........'.'....... APPLICANT

AND

1. STANDARD CHARTERED BANK (UI LTD

2. DAVID MPANGA (RECEIVER). RESPoNDENTS

## RULING BY CHRISTOPHER GASHIRABAKE' JA

#### (SINGLE JUDGEI

The Applicant filed Miscellaneous Application No. 46 of 2022, for an interim order of injunction pending the determination of civil Application No. 4512022, arising from Civil Appeal No. 27912022' The applicant invoked Rules 2(2), 6(2) (b) and 42(2) & 43 of the Judicature (court of Appeal Rules) Directions s. I. 13-10 for orders that;

> An interim Order of injunction doth issue maintaining the status quo of and restraining the respondents, thcir agents , appointees, assignees, successors, cmployces, servants and any other persons acting on their behalf or claiming an interest through them, or who may derive or claim an intcrcst through the respondents , from advertising or continuing to advertise for sale from selting, tampering with, disposing , auctioning , taking possession of, or taking any steps and or carrying out any

actions in any manner whatsoever which are able to and or are likely to alienate and or interfere with the applicant's interest in properties comprised in Kyadondo Block 197 Plots 121, \22,677 and 678 at Kitetika- Wakiso , and Kyadondo Block 22O Plot 1623 at Kiwatule, until the determination of the main application for a temporary injunction

- 2. An interim order of injunction issues restraining the respondents, theirs agents appointees, assignees, successors , employees, servants , and any other persons acting on thcir bchalf or claiming an interest through them , or who may derive or claim an interest through the respondents from carrying out further receivership duties over plan , business assets and machinery of the applicant , and from advertising or continuing to advertise for sale , from selling , tampering with , disposing auctioning, taking possession of, or taking any steps and or carrying out any actions in any manner whatsoever which are able to, and or are likely to alienate and or interfere with the Applicant's interest Kyadondo Block 197 plots l2l, 122,677 and 678 at Kitetika , until the determination of the main application for temporary injunction - 3. Costs of this application be provided for.

The grounds supporting the applications are averred in the affidavit in support of the Motion by Mr. David Ochieng which are briefly that;

- l. There is a pending substantive application for a temporary injunction before this court, from which this interim apPlication arise, and is had a high likelihood of success. - 2. There are pending civil actions and court proceedings, including Civil Appeal No. 279/2021, HCCS, No. 443/2016 and HCCS No. 924/2O2O between the parties, in which properties, plant and machinery on land comprised in Kyadondo Block 197 Plots 121, 122, 677 and 678 at Kitetika, and Kyadondo Block 22O PIot 162 at Kiwatule are a subject of dispute , in the pending actions, there is a contention over the 1\*r respondent's purported claim over the

properties and the debt being alleged by the 1\$ respondent is subiect of a pending suit where the 1"r respondcnt as a plaintiff therein has a Iegal burden to prove the cxistence of its claim.

- 3. There is a prima facie case and the pending actions raise triable issues and serious matters meriting thorough judicial consideration, and questions touchinB the subject matter of the suit, \'hich warrant consideration and hnal determination by this honorable court , on which courts will pronounce judgments , and the applicant's case has a very high likelihood of success. - 4. There is an imminent threat of alienation and a danger of wasting away the aforesaid properties, plant assets and machinery by the respondents and other persons acting on their behalf, steps capable of disposing of land or alienating the suit properties before the determination of Civil Appeal No. 27912021 are being taken.

- 5. A public advert dated O2ud February, 2022, aflectinq the above described properties has been run in the New Vision newspaper with a threatened sale date of O4th March, 2022 published therein. - 6. The applicant will suffer substantial loss and irreparable injury, which cannot be easily compensated for in damages and there is a serious likelihood of the occurrence of a travesty and a negation of justice with pending actions likely to be rcndered nugatory. - 7. The balance of convenience lies in favour of the applicant , who is the most likely party to suffer serious injustice - 8. It is just and equitable for this application to be granted.

The 1"t respondent opposed this application through an affidavit by Mr. Richard Ssuna who averred that the application is barred in law, an abuse of court process, frivolous and vexatious. He averred that the applicant obtained several facilities from the 1"t Respondent in 2O2O, 2Oll, 2013, arld 2014. Following requests by the Applicant, the loan was consolidated into one term loan. The facility agreement indicated, as agreed by the parties that it was a consolidation of outstanding exposure previously incurred.

Despite the consolidation, the applicant continued defaulting on his loan obligations. The total indebtedness at the time of the default notice was issued was UGX 7,5L8,249,828 l= (Uganda Shillings Seven Billion Five Hundred Eighteen million TWo Hundred Forty Nine Thousand Eight Hundred Twenty Eight). When the applicant got the default notice, they came up with a payment plan but the applicant still failed to pay on the 23'a February,20 16. That O is when the 1"t respondent appointed the 2nd respondent as a receiver. The respondent averred that the applicant has failed to prosecute its case and has resorted to interim orders and injunctions as a way of frustrating the l"t respondent from recovering its money.

The applicant denied the averments in the affidavit in reply' Mr. Ochieng averred that there are special circumstances warranting a grant of an interim order to prevent a likely occurrence of an injustice and an abuse of court process being perpetrated by the respondent and their agents.

He further averred that the respondent has not denied that there's a Civil Appeal, substantive application for stay and imminent threat of alienation of the above suit. It is only just and equitable for this court to preserve the status quo of the suit properties pending determination of the substantive application.

## Representation

The Applicant in this matter was represented by Mr. Joseph Kyazze, Arnold Norgan Himala and Moses Opio whereas the respondent was represented Mr. Bruce Musinguzi and Akantorana KobusinSre. During the hearing of this matter the applicant prayed for a protective order which was granted because there was an imminent sale of the suit property on O4th March 2022, as per advert of New vision, Wednesday, February 2, 2022. Court gave the time lines within which counsel would file submissions. Counsel prayed that court adopts the said written submissions.

## Submissions.

Counsel for the applicant submitted that Rule 2(21 of the Judicature (Court of Appeal Rules) Directions SI 13-1O, vests wide discretionary powers in court to make such orders as may be necessary to attain the ends of justice or prevent abuse of the process of any such court. With these powers this court can O preserve justice and avert a negation and travesty of justice, in Civil Appeal No. 279 I 2021 and Civil Suit No. 4431 2016. Counsel relied on Hon Theodore Ssekikubo and others vs. Attorney General and others, SC Constitutional Application no- 04l2Ol4 where it was held that;

> "Rule 2(2) .... gives this court a vcry widc discretion to make such orders as may be necessary to achieve the ends of

justicc. Onc of the ends ofjusticc is to prcscrve the right of appeal."

# Counsel further made reference to Patrick Kaumba Wiltshire vs. Ismail Dabule SCCA No. 03 of 2018 and Alcon International vs. New Vision newspaper (SCCA No. O4 of 2O1O)

He further submitted that the applicant has ably demonstrated by afhdavit evidence, that it has a substantive application pending in this court for a temporary injunction for preservation of the properties in dispute comprised in Kyadondo Block 197 Plot 121,122,677 and 678 at Kitetika, pending the disposal of Civil Appeal No.279 l2O2l.

Mr. Kyazze further submitted that the applicant has also demonstrated that there is an imminent threat of alienation of the suit property which are the subject of the substantive application. The threat will render the main application and appeal futile and nugatory. The applicant adduced a newspaper advert of New vision dated 2nd February 2022, advertising the sale of the suit properties by public auction on O4th March 2022.

Under Rute 6(2)(b) of the rules of this court, the law provides that this court in civil proceedings, where a notice of appeal has been lodged in accordance with rule 76 of these rules, order an injunction on such terms as the court may think just. The applicant has filed a Notice of Appeal, Civil appealNo.279l202 1, in which it seeks to reinstate HCCS No.443 12016' That as such the applicant fulfilled the requirements of rule 76, so it qualifies for the grant of an interim order. Counsel made reference to Yakobo Senkungu and others vs. Cerencio Mukasa, SCCA No. 5/2O13, Giuliani Gargio vs. Calaudlo Casadio, SCCA No. O3/2O13 and Devani vs. Bhadresa and anor, Civil Appealto 2Lll97L.

In his conclusion counsel for the applicant prayed that this court issues orders that;

> 1. An interim Order of injunction doth issue maintaining the status quo of and restraining the respondents, their agents , appointees, assignees, successors, employecs, servants and any other persons acting on their behalf or claiming an interest through them, or who may derive or claim an interest through the respondents , from advertising or continuing to advertise for sale from selling , tampering with, disposing , auctioning , taking possession of, or taking any steps and or carrying out any actions in any manner whatsoever which are able to and or are Iikely to alienate and or interfere with the applicant's interest in properties comprised in Kyadondo Block 197 Plots 12 I, 1,22, 677 and 678 at Kitetika- Wakiso, and Kyadondo Ellock 22O Plot 1623 at Kiwatule, until the determination of the main application for a temporary injunction

2. An interim order of injunction issues restraining the respondents, theirs agents appointecs, assignees, successors , cmployees, servants , and any other persons acting on their behalf or claiming an interest through them , or who may derive or claim an interest through the respondents from carrying out further receivership duties over plan , business assets and machinery of the applicant , and from advertising or continuing to advertise for sale , from selling , tampering with , disposing auctioning, taking possession of , or taking any steps and or carrying out any actions in any manner whatsoever which are able to, and or are likely to alienate and or interfere with the Applicant's intercst Kyadondo Block 197 plots l2l, 122,677 and 678 at Kitctika , until the determination of the main application for temporary injunction

In response counsel for the respondent submitted that the injunction being sought is on property that was pledged to the respondent therefore the applicant cannot claim that it will suffer irreparable injury on properties it pledged. That more importantly part of the plant and a machinery is being wasted away with the passing time. That the grant of the interim injunction will greatly O prejudice the l"t respondent as the plant and machinery will further depreciate and the l"t respondent may not be able to recover any money from the sale of this property. Secondly the l"t respondent is a reputable financial institution that is capable of paying the applicant in the event that the appeal succeeds. Counsel for the respondent made reference on Shumuk Properties Ltd vs. Guaranty Trust Bank (U) Ltd CACA 22O OF 2018, where court held that;

> "The respondent being a financial institution must be having the means to atone for eventuality of damagc in case the decision of the case is in favor of thc applicant."

Counsel for the respondent submitted that the applicant has not satisfied this ground to warrant the grant of an interim injunction.

On the balance of convenience counsel submitted that the balance of convenience respondent. The applicant by keeping with lor 1S this the respondent in favor of the money and not paying back is disenfranchising other borrowers and depositors. He relied on, Shumuk Properties Ltd vs. Guaranty Trust Bank (U) Ltd CACA 22O OF ?OLA, it was held that;

> "On the balance of convenience, the respondent's affidavit evidence is that the applicant's loan is now categorized as a non-performing loal under the Financial lnstitutions Credit Classification Regulations, meaning the respondent is under an obligation to realize the security to recover the outstanding balance. There is clearly a hnancia.l inconvenience to the respondent as it means that the respondent bank is being deprived of the money it lent to the applicant as well as the money it uses to provide for the loan"

In response to the respondent's reply, counsel for the applicant submitted that the law on the grant of an interim order has since been settled. He submitted that the only thing the applicant is mandated to prove is that there's a notice of appeal duly filed a substantive application for stay and the existence of an imminent threat of alienation of the suit property, as was held in Mathew Rukikaire vs. Incafex Ltd SCCA No.1O/2O15. That the applicant O has fulfilled all these conditions as demonstrated in the notice of motion and affidavit evidence.

## Consideration of the application on merit.

I have read the application together with the affidavits and the submissions of both counsel. I have also addressed the law and the authorities cited by both counsel. The guiding law on grant of

## interim Order is well stated in, Rule 2l2l of the judicature (Court of Appeal Rules) Directions S. I 13-1O, which provides that,

"Nothing in these Rules shall be taken to limit or otherwise affect the inherent power of the court, or the High Court, to make such orders as may be nccessary for attaining the ends ofjustice or to prevent abuse of the proccss of any such court, and that power shall extend to setting aside judgments which have been proved null and void after they have been passed, and shall be exercised to prevent abuse of the process of any court caused by delay."

Rule 6 (2)(b), provides that Subject to sub rule (1) of this rule, the institution of an appeal shall not operate to suspend any sentence or to stay execution, but the court may,

"in any civil proceedings, where a noticc of appea-l has becn 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"

It is well settled that the interim application should be granted following the satisfaction of the trite conditions for the grant of an interim order. The interim stay is for a defined time until the main issues are resolved through the main application before a full bench. Basically the interim order is to preserve the status quo until the rights of the parties are established.

The supreme court and this court have applied the above provisions in several cases including China Henan International Cooperation Group Co. Ltd. Vs. Justus Kyabahwa, SCCA No.3O of 2O2L, which followed Hon. Theodore Ssekikubo and 3 others

## vs. Attorney General and others, Constitutional Application No. 4 of 2014, where it stated;

"Rule 2(2) of the judicature supreme Court rules (an equivalent to Rule 2(2) of this court) gives this court very wide discretion to make such orders as may be necessary to achieve the ends ofjustice. One of the ends ofjustice is to preserve the right of appeal........ The consideration for grant of an interim ordcr of stay of execution or interim injunction is whether there's a substantivc application pending and whether there's a serious threat of execution before the hearing of substantive application. Needles to say, there must be a notice of appeal."

Court in Zubeda Mohamed and anor vs. Laila Wallia and anor Civil Reference No. 07 12016, summarized the principles in the above case and stated that;

> ln summary, there are conditions that zrn applicant must satisfy to justify the grant of an interim order;

1. A competent notice ofappcal

- 2. A substantive application and - 3. A serious threat of execution.

At this stage the court is not interested in the merits of the case but its interest is to establish whether the applicant has satisfied the above mentioned conditions.

Regarding the notice of appeal the applicant duly filed a memorandum of appeal Civil Appeal no 279 / 2O2l , to this court on the 27th September 202 1, seeking for the reinstatement of HCCS No. 443 12016, in which properties comprised in Kyadondo Block

197 Plots 121,122,677 and 678 at Kitetika. Even when the law makes mention of the Notice of appeal as the basic requirement, a memorandum of appeal suffices since the appellant has taken a further step beyond the Notice of appeal.

The applicant must also prove that there is a substantive application pending in this court. In paragraph 7 of the applicant's affidavit in rejoinder the applicant avers that there is a substantive application civil application No.45 of 2022. This ground is therefore satisfied.

Lastly, the applicant produced in this court the evidence of a New vision newspaper advert dated 02"d February, 2022, advertising the sale of the suit property by Public Auction on 04th March, 2022, rt was upon this threat that this court granted the applicant a protective order to postpone the sale until the determination of this application. This threat was only put on hold in anticipation of this ruling. If this application is not granted, the respondent will be free to continue with the sale hence changing the status quo. It is therefore in the interest of justice that the status quo is preserved before the main issues are determined by the main application.

The respondent raised three grounds of objection that this application should not be granted. Namely;

l. Abuse of court process

2. Applicant has no locus to bring the application

3. The applicant has not paid the 30%o sale value of the mortgaged property.

I am however guided by the decision of this court in Woodmore Energy Consultancy Ltd and 3 others vs. Guaranty Trust Bank limited CACA No 27012016; where court held that it is not a requirement for an applicant to make a deposit of 30% of the forced sale before the court can grant an interim order. As long as the applicant has satisfied the three requirements previously mentioned above, the other concerns are to be addressed in the main a application. As earlier echoed the purpose of an interim order is to preserve the stay quo until the issues between the parties are determined by a full bench. The decisions relied on by the respondent were not interim applications, but were decisions made by the full bench. It is therefore not appropriate for this court to delve into the issues of the law raised by the respondent at this stage.

With the above considerations this application is granted until the determination of the main application by a full bench.

Dated at Kampala this {...... day or .... /Fn ;1......2022

C. GASHTRABAKE JUSTICE OF APPEAL