Reliable Cargo Centre Limited & 2 Others v Statewide Insurance Company Limited (Miscellaneous Application 1021 of 2024) [2024] UGCommC 354 (4 November 2024)

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA [COMMERCIAL DIVISION] **MISCELLANEOUS APPLICATION NO. 1021 OF 2024**

# [ARISING FROM CIVIL SUIT NO. 0678 OF 2014]

# 1. RELIABLE CARGO CENTRE LTD

## 2. KELLEN KOBUTUNGI

3. KARUNGI BEATRICE::::::::::::::::::::::::::::::::::::

#### **VERSUS**

### STATEWIDE INSURANCE COMPANY LTD::::::::::::::::::::::::::::::::::::

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

### **RULING**

This application was brought by notice of motion under sections 14, 33 & 39 of the Judicature Act, section 98 of the Civil Procedure Act, Order 22 rule 23, and Order 52 rules 2 & 3 of the Civil Procedure Rules(CPR) for orders that the execution of the decree and orders arising from the judgments and orders against the applicants in Civil Suit No. 678 of 2014 be stayed pending the appeal No. 90 of 2024 and the costs of this application be provided for.

This application was supported by the affidavits of Amuge Doreen, Kellen Kobutungi and Karungi Beatrice and opposed by the affidavit in reply of Ndagire Racheal for the respondent.

The facts giving rise to this application are that the respondent filed Civil Suit No. 0678 of 2014 against the applicants. Judgment was entered against the applicants and the applicants appealed to the Court of Appeal against the whole decision. The applicants now seek to stay the execution of the decree in Civil Suit No. 0678 of 2014.

#### REPRESENTATION

The applicants were represented by M/s Odokel Opolot & Co Advocates whereas the respondent was represented by AB & David Advocates.

# **RULING**

I have carefully read the pleadings of the parties and listened to the submissions of counsel in this matter.

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The respondent raised a preliminary objection to the effect that this application is improper before this Court as it is filed under the wrong law.

The respondent submitted that the applicants brought their application under Order 22 rule 23 of the CPR yet the correct provision is Order 43 rule 4(2). Counsel contended that the application is an abuse of court process having been filed improperly before this Court and the same should be dismissed.

The applicants submitted relied on section 98 of the Judicature Act which gives the Court inherent powers to make decisions to meet the ends of justice and Article $126(2)$ (e) of the Constitution which provides that substantive justice should be administered without undue regard to technicalities. Counsel submitted that the preliminary objection should be overruled and the application determined on its own merits.

In the instant case, the applicants relied on **Order 22 rule 23 of the CPR** which provides that:

"The court to which a decree has been sent for execution shall, upon sufficient cause being shown, stay the execution of the decree for a reasonable time to enable the judgment debtor to apply to the court by which the decree was passed, or to any court having appellate jurisdiction in respect of the decree or the execution of the decree, for an order to stay the execution, or for any other order relating to the decree or execution which might have been made by the court of first instance, or appellate court if execution has been issued by the appellate court or if application or execution has been made to it".

For this Order to be applicable, there must be a transfer of the decree from a Court that passed the decree to a Court that will execute the said decree. In the instant case, there is no such transfer of the decree.

Therefore, Order 22 rule 23 is not applicable in the circumstances. The order that is applicable in the circumstances is Order 43 rule 4(2) of the CPR.

Though I agree with the respondent that the said application is filed under the wrong law, in the exercise of the powers granted to this Court under sections 33 and 98 of the Judicature Act and in a bid to administer substantive justice without undue regard to technicalities, I will determine this application under the correct law.

This preliminary objection for the above reasons is accordingly overruled.

The main issue to be considered under this application is **whether the** execution of the decree in Civil Suit No. 0678 of 2014 should be stayed pending the determination of the applicant's appeal to the Court of Appeal.

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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 CPR provides that where an application is made for a 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 a stay of execution pending appeal should be prepared to meet the conditions set in **order 43 rule 4(3) of the CPR** which provides that:

"No order for stay of execution shall be made under sub rule (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 maintain that the purpose of the application is not to defeat justice by delaying tactics and to prove that the judgment debtor is serious with his application for stay of execution.

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

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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 above principles, I will therefore apply the same in the determination of this application.

#### $\mathbf{i}$ . Whether there is a notice of appeal

The applicants attached a memorandum of appeal to their application marked annexure "A" given the number Civil Appeal No. 090 of 2024.

I therefore find that the applicants have duly lodged an appeal in the Court of Appeal.

#### ii. Whether the application has been made without unreasonable delay

Applications for stay of execution must be made without unreasonable delay and the reckoning of time to determine if a delay is unreasonable begins at the time the decree or order is sealed and becomes enforceable (Formula Feeds Ltd v KCB Bank Ltd HCMA No 1647 of 2022).

The respondent contends that there has been an unreasonable delay in the making of this application since the judgment in the suit sought to be appealed was entered on the 24<sup>th</sup> August 2022 and the applicants filed this application on the 4 of June 2024 which is one year and nine months later.

The applicant however contends that the judgment in the suit sought to be appealed was brought to the applicant's knowledge late and that the bill of costs has been recently taxed therefore there has been no dilatory conduct.

In the instant case, the bill of costs was filed in this Court on the 9<sup>th</sup> January 2024 and it was taxed and a certificate of taxation was issued on the 11<sup>th</sup> July 2024. The applicants filed this application on ECCMIS on the 4<sup>th</sup> June 2024 which is almost five months after the application for the bill of costs was filled. Be it as it may, I am also cognizant of the fact that this application was filed before the bill of costs was taxed.

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I therefore find that the delay was not unreasonable.

#### iii. Whether there is a serious or imminent threat of execution of the decree if the application is not granted

The applicants contend that there is an imminent threat of execution since the respondent has attempted to execute and a bill of cost is taxed.

The respondent contends that no execution proceedings have commenced and hence this application is therefore premature. The respondent further contends that their bill of costs was taxed at Ugx $9,000,000/$ and this was with the consent of the parties.

In the case of **Baguma Paul T/A Panache Associates v Eng. Karuma Kagyina HCMA No.460 of 2020**, Justice Musa Ssekana while citing the case of Orient Bank Ltd v Zaabwe & Others HCMA No 19/2006 stated that:

"The general rule is that courts should not order a stay where there is no *evidence of any application for execution of the decree.*"

In the case of Formula Feeds Ltd v KCB Bank Ltd HCMA No 1647 of **2022** Justice Stephen Mubiru stated that:

"An order of stay will issue only if there is actual or presently threatened execution. There must be a direct and immediate danger of execution of the decree. There should be unequivocal evidence showing that unconditional steps as to convey a gravity of purpose and imminent prospect of execution of the decree, have been taken by the respondent. Steps that demonstrate a serious expression of an intent include; extracting the decree, presenting and having a bill of costs taxed, applying for issuance of a warrant of execution, and issuing a notice to show cause why execution should not issue."

In the instant case, though, the bill of costs has been taxed and a certificate of taxation issued, there is no evidence to show that an application for execution of the decree has been made. No notice to show cause why execution should not be issued has equally been issued.

I therefore find that there is no imminent threat of execution.

#### Whether substantial loss may result to the Applicant unless the stay iv. of execution is granted

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The applicants contend that they will suffer irreparable damage if the stay is not granted. During submissions counsel for the applicants submitted that the decretal sum is a substantial amount that will cripple the applicant's business.

The respondent however contended that the applicants have not demonstrated the irreparable damage that they will suffer. Counsel submitted that the money in question is Ugx $9,000,000/$ = and the bill was taxed by consent of all the parties.

In the case of **Tanzania Cotton Marketing Board v Cogecot Cotton Co.** SA (1995-1998) 1 E. A 312 where Lubuva, J cited with approval the Indian case of **Bansidhav v Pribku Dayal AIR 41 1954** it was stated that:

"It is not enough to merely repeat words of the code and state that substantial loss will result; the kind of loss must be specified, details must be given and the conscience of the court must be satisfied that such loss will really ensue. The words substantial loss cannot mean the ordinary loss to *which every judgment debtor is necessarily subjected when he loses his* case and is deprived of his property in consequence. That is an element *which must occur in every case and since the law expressly prohibits stay* of execution as an ordinary rule, it is clear the words 'substantial loss' must mean something in addition to all different from that."

Further, in the case of Formula Feeds Ltd v KCB Bank Ltd(supra), Justice Mubiru stated that:

"The loss ought to be of a nature which cannot be undone once inflicted." The court has to balance the interest of the applicant who is seeking to *preserve the status quo pending the hearing of the appeal so that his or her* appeal is not rendered nugatory and the interest of the respondent who is *seeking to enjoy the fruits of his or her judgment".*

The Honorable Judge went on to find that:

"For that reason, execution of a money decree is ordinarily not stayed since satisfaction of a money decree does not amount to substantial loss or irreparable injury to the applicant, where the respondent is not impecunious, as the remedy of restitution is available to the applicant in the event the appeal is allowed. The respondent has not been shown to be impecunious nor the fact that execution of the decree will have any irreversible effect. The

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applicants have failed to prove this requirement too, as far as recovery of *the monetary award is concerned."*

The applicants in the instant case save for mentioning in their affidavit in support that they will suffer irreparable damage, have not demonstrated or brought to the attention of this Court in detail which loss they will suffer.

I therefore find that the applicant will not suffer any substantial loss and if any, it is one that can be compensated by an award of restitution or damages.

This ground therefore fails.

#### $\mathbf{v}.$ Whether 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.

Depositing security for due performance was addressed in the case of Kisaalu Joseph & 10 others v Nakintu May & Anor Miscellaneous **Application No 105 of 2020 where** Justice Victoria Nakintu stated 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.*"

Due to the complications associated with security for due performance as discussed above, Courts have resorted to making orders for the award of security of costs.

The purpose of paying security for costs was discussed in the case of **Shem** Mpanga Mukasa & Anor v Kizza Clessy Barya, Miscellaneous **Application No. 479 of 2021** by the Hon. Lady Justice Alexandra who stated that:

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"*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."*

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 Miscellaneous Application No 36 of 2021).

Both the applicants and the respondent did not make submissions in regards to this ground. There is no security for costs deposited and the applicant has not demonstrated or submitted on their willingness to deposit security for costs.

This ground therefore fails as no security has been deposited.

#### vi. That refusal to grant the stay would inflict greater hardship than it would avoid

Save for the averments that the applicants will suffer irreparable damage if the decree is executed against them, the applicants have not adduced any evidence to this effect or to show that execution will cause greater difficulty/hardship or disruptions beyond which every judgment debtor is subjected to when they lose a case.

As such, I therefore find that the applicants have also failed to demonstrate to this Court that the refusal to grant the stay would inflict greater hardship than it would avoid. The balance of convenience therefore lies in favour of the respondent.

I therefore find that the applicants have failed to satisfy the majority of the essential requirements for the grant of an order of stay of execution pending appeal. Consequently, this application fails and is hereby dismissed with costs to the respondent.

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