Sembuya v All Port Freight Service (U) Ltd (Civil Application 15 of 1998) [1999] UGSC 35 (6 May 1999)

Full Case Text

### THE REPUBLIC OF UGANDA

# IN THE SUPREME COURT OF UGANDA

### AT MENGO

A. H. O. ODER, JSC., A. N. KAROKORA, JSC., J. N. MULENGA, JSC., (CORAM: G. W. KANYEIHAMBA, JSC., E. M. MUKASA-KIKONYOGO, JSC).

# CIVIL APPLICATION NO.15 OF 1998

...................................... FRANCIS SEMBUYA ................

**VERSUS**

ALL PORT FREIGHT SERVICE (U) LTD ...................................

(Notice of Motion under Rule $5(2)(b)$ , 40(2) and 41 of the Supreme Court to stay execution decree and orders of High Court in Civil Suit No. 409 of 1995).

#### RULING OF THE COURT

This is an application by way of notice of motion under Rule 5(2) (b), Rule 40(2) and Rule 41 of the Rules of this court. It is seeking stay of execution pending a second appeal to this court. It is supported by an affidavit sworn by Francis Ssembuya, hereinafter to be called the applicant.

The brief facts leading to the application are that the applicant and one Julius Kamaanyi, hereinafter to be referred to as the co-defendant, were at the material time businessmen. They were trading under the name of Aero International Ltd, but which was unregistered. During the year 1993 All Port Freight Services (Ltd), another business concern, hereafter to be referred to astheRespondent,deliveredcementvaluedatShs'2O0milliontothe applicant and the co-defendant. The applicant and the co-defendant purported to pay the purchase price by cheque, but the cheque was dishonoured by their bank.. Later they made part payment of Shs.53 million which left a balance of Shs' 147 million unpaid'

when payment of the said balance of Shs.147 million was not forthcoming, the Respondent, filed High court civil suit No.409 of 1995 against both the applicant and co-defendant. The co-defendant, admitted the Respondent's claim in the High court and had iudgment entered against him by consent. The applicant, however, disputed liability but the case was decided against him by the learned trial Judge. Both defendants were iointly and severally ordered to pay to the Respondent the balance of shs.147 million as special damages with interest at the rate ol 22o/o p.a. and shs. I5 million being general damages with interest at the rate ol 60/o p'a'

Aggrievedbythe,iudgmentofthelearnedtrialJudge,theapplicantlodgedan appeal to the Court of Appeal against the decree and orders of the High Court. On 2nd December, 1998 the Court of Appeal dismissed the applicant's appeal and upheld the judgment and orders of the High Court'

Again being dissatisfied with the decision of the Court of Appeal the applicantthroughhislearnedcounsel,Mr'Byenkya,filedanoticeofappeal to this court against the dismissal of his appeal by the first appellate court.

lmmediately he lost the case in the High court, the applicant applied to the trial court for stay of execution pending appeal. He offered to deposit in court as security for the payment of the decree of the High court a certificate of title in respect of his land comprised in Block 273 Plor 405

Kvadondo. Accordin gto paragraph 8 of the applicant's affidavit the said land was professionally valued at Shs'75 million in January 1996'

The applicant's application for stay of execution was granted by the learned trialJudge,KaniaJ.,butonconditionthatinadditiontothecertificateof title, the applicant paid a further Shs.87 million in cash' for the order to remainoperativefortwoweeks. Findingtheconditionratherharsh,the applicant, applied to the Court of Appeal as a court of concurrent jurisdiction, for stay of execution. When the application was placed before the court for hearing, the Respondent had no ob,iection to it' Hence' an order for stay of execution, pending the first appeal, was granted unconditionally by the Court of Appeal'

When the applicant's appeal was dismissed by the Court of Appeal' the order for stay of execution lapsed. lt, therefore, became necessary for the applicant to bring the present application for stay of execution of the High Court Decree and orders, as pendence of a second appeal would of course' be no bar to execution (Rule 5(2) fth les o ts co ln compliance withtheprovisionsofthesameRuleS(2)(b)(supra}anoticeoftheintended applicant's appeal was filed to this court by learned Counsel' Mr' Byenkya' The applicant once again offered the same certificate of title in respect of his land comprised in Block 273 Plot 4O5 Kvadondo (supra) valued at Shs.75 million in 1 996.

FromthesubmissionsofMr. Byenkya,fortheapplicant,thegroundsofthe application are contained in the affidavit of the applicant' lt was argued by Mr. Byenkya that the applicant will suffer substantial loss if stay of execution is not granted and the applicant had to pay such a substantial sum of money. Stay will not be prejudicial to the Respondent because the

applicant,s co-defendant having admitted liability, the Respondent will have a choice to proceed against either of the defendants.

Further Mr. Byenkya told court that there were important points of law and Iact to be considered by this court. The applicant is questioning the holdings of fact which were not supported by the pleadings and evidence, relied on in the High Court and accepted by the Court of Appeal'

The Respondent opposed the application. Relying on the affidavit in reply sworn by Francis Wazarwahi Bwengye one of the Respondent's Counsel, Mr. Tibesigwa who appeared in this application submitted that the application was without merit. On the decision in the case of Somali Democratic Reoublic vs Anooo Sunderial Treon {Aoo. No.11 0f 1998 S. C) he submitted that the test applicable in this matter was whether the applicant had shown special circumstances and good cause to justify grant of stay. on the record before court he said that none had been shown.

To illustrate his point Mr. Tibesigwa said that one such instance of special circumstance would be sworn evidence, like an affidavit to the effect that if execution proceeded against the applicant he would not get his money back if his appeal succeeded. counsel cited as authority for this argument, Bakes vs Laverv (1885) 14. QB 769 C'A. Further in the case of Annot Lvle (1886111 P. D1.14 C. A at Page 1 16 Lord Bowen expressed the view that "if an applicant has not shown that the Respondent is unable to refund the money if execution is levied, it must be assumed that the Respondent will be able to pay". ln the present application no affidavit was sworn to show that the Respondent will not be able to refund the applicant's money' A statement from the bar is not enough. Mr. Tibesigwa therefore asked this court to reiect the application for stay as no evidence of special circumstances and good cause was adduced to justify grant of stay' On the

other hand Mr. Tibesigwa, wondered, how the applicant will be able to raise Shs.250 million to pay the final decree if he had failed to raise Shs.87 million only ordered by the High Court.

With regard to the ground of likelihood of success of the appeal advanced by Mr. Byenkya, Mr. Tibesigwa's reply was that as it was held in the case of Kampala Bottlers Ltd vs Uganda Bottlers Ltd. Civil Appeal No.25 of 1995, success of the appeal is not a condition for granting stay of execution. In any case looking at the draft Memorandum of Appeal, Mr. Tibesigwa submitted that the applicant's appeal had no likelihood of success. As a second appeal the applicant had to rely on legal issues only. See Shantilal Maneklal Ruwala vs R. 1957 E. A.570 C. A.

Mr. Tibesigwa further submitted that the grounds of the intended appeal will fail because they are attacking the findings of fact of the Court of Appeal. Further on the decision in the case of Monks vs Bartram (1891) 1 Q B 346 C. A. even if this court decided to consider the matters of fact complained of by the applicant, the issues they raise, in Mr. Tibesigwa's submission, did not warrant grant of stay of execution. On the proposition that if the court is satisfied that the applicant will not pay the decretal amount it would not grant stay of execution, Mr. Tibesigwa prayed for the dismissal of the application. On the evidence on record, the applicant will not be able to pay the final decree if he was defeated on appeal. Mr. Tibesigwa submitted that in applications of this nature the court would take into consideration the financial status or creditworthiness of the applicant. A case in point is Barclays Bank of Uganda Ltd vs Godfrey Mubiru (Civil Appeal No.9/97 S. C). Where the court held that:-

> "We note that the applicant is a Commercial Bank. can take judicial notice of the fact that the We applicant Bank has been here a long time. There is no

> > $\mathsf{S}$

evidence before us suggesting that the applicant is engaged in frivolous Appeal or that it will not perform the decree if it loses the appeal".

If, however, this court was inclined to allow the application Mr. Tibesigwa prayed that the applicant be ordered to deposit into court the whole decretal amount. As far as he was concerned the certificate of title to land was not appropriate security in view of the provisions of Rule 100 of the Rules of this court. He argued that it is not certain that the respondent would realise his money from the sale of the land if the appeal was lost. Mr. Tibesigwa added that the applicant has always been reluctant to pay the decretal amount. Further it was contended on behalf of the Respondent that the orders for stay of execution should not extend to costs both in this court and courts below.

The criterion for stay of execution is well settled. It is to be found in a number of decided cases including Kampala City Council vs National Pharmacy Ltd. (1979) HCB 215 and Somali Democratic Republic vs Anoop Sunderial Treon, Civil Appeal No.11 of 1998 Supreme. Court.). In both cases it was held by this court that a stay of execution pending appeal under Rule 5(2) (b) can only be granted if there are special circumstances and good cause to justify such a course. Short of that test the court will not be persuaded to grant stay of execution. Looking at the instant application we are satisfied that the required conditions for stay exist.

Firstly, we noted that in the present case there were two defendants one of whom, admitted liability in the High Court. On the evidence before us there is nothing to suggest that the Respondent will not be able to receive his money from that co-defendant. We agree that the Respondent is at liberty to proceed against any of the two judgment/debtors since the orders were made jointly and severally against both of them but in the circumstances of this case, the Respondent's interest will not be prejudiced' There is an option to proceed against the co-defendant if the applicant defaulted to effect payment. we are persuaded by Mr. Byenkya's submission that if the applicant was forced to pay the whole decretal amount before his intended appeal was heard he would suffer substantial loss. The aforesaid in our considered view constitute special circumstances to iustify grant of stay of execution.

Secondly, the applicant having complied with the requirement of Rules 5 (2)(b) he is entitled to be heard on appeal. ln the judgment of Colton L'J', in Wilson vs Chu rch (No2) (18 79t 12 Ch. .458 speaking of a second aPPeal he said that "where a party is appealing, exercising his undoubted right of appeal, it is the duty of the court to see that if he succeeds his appeal is not nugatory". ln the instant application we agree with the submission of Mr' Byenkya that if execution proceeded the purpose of the applicant's appeal would be defeated and hence made nugatory.

We do not agree with Mr. Tibesigwa's submission that the failure by the appellant to show that the respondent will not be able to refund his money if the appellant won the appeal was detrimental to his application' That was not the only special circumstance' There were others such as those we mentioned which we consider sufficient for grant of stay of execution'

We agree with Mr. Tibesigwa on the proposition that if it is shown that the applicant will not be able to pay the final decree if he lost the appeal, the court may not grant stay of execution. The case in point is Barclavs Bank (U) Ltd vs Godfrev Mubiru (supra) where the court took into account the applicant,s financial status, and ability to pay and granted stay of execution.

Be that as it may no evidence was adduced in the present case to support the contention that the applicant will not be able to pay the decree. All the evidence the court has on which to base its decision is the averment in the affidavit in reply sworn by Mr. Francis Bwengye under, paragraph 5 which reads as follows:

"The proposed security is inadequate to satisfy the decretal amount as would eventually be awarded bearing in mind it will be over Shs.250 million".

The Respondent's complaint is not inability of the applicant to pay but inadequacy of the security which can easily be cured by imposing appropriate orders.

Rule 100 (3) of the Rules of this court, provides that:-

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

Further even if the applicant defaulted to pay the decretal amount if he lost the appeal, the Respondent has an option of proceeding against the codefendant. He can carry out execution against either of them or both of them. All in all we are satisfied that there are special circumstances and good cause in the present case to justify grant of stay of execution

Before we proceed to consider the issue of adequate security we would like to deal with the question of stay of costs. It was Mr. Tibesigwa's submission that if this court was inclined to allow the application the stay should not extend to costs. He did not cite any particular authority on this point. We agree he may have a point. In Wilson vs. Church No.2 (supra) the court expressed the view that "when the court makes an order to stay proceedings pending appeal it will put the applicant on terms to speed the

appeal; and it will not interfere with the execution of the order of the court below respecting costs except to put the solicitor who is to receive the costs upon an understanding to refund them if required to do so".

The aforesaid notwithstanding we think that the circumstances of this application do not warrant exclusion of the order for stay of execution from applying to costs even in respect of the lower courts. We would, however, urge the parties and direct the Registrar of this court to speed up the appeal.

We now turn to the issue of security. The respondent having raised no objection to offering the certificate of title in the High Court and Court of Appeal we see no convincing reason for rejecting it in this court. The reasons given for the change of mind are not convincing. Rule 100 of the Rules of this court cited by Mr. Tibesigwa does not specifically exclude land as security. It only makes provisions for the mandatory payment of Shs.400,000/ = as security for costs by a party lodging a civil appeal. Rule $100(1)$ reads that:-

"Subject to rule 108, there shall be lodged in court on the institution of a Civil Appeal as security for the costs of appeal the sum of Shs.400,000/ $=$ ".

Further, sub Rule 3 of Rule 100 (supra) gives a court discretion where it thinks fit, inter alia, to direct further security for costs to be given. In our considered view it can be invoked to protect the respondent's interest in this case.

We accept the submission of the Counsel for the Respondent that the certificate of title offered by the applicant is inadequate considering the sum which may be involved in the final decree should the appeal fail. However, we do not think that, the circumstances of this case warrant ordering the

which may be involved in the final decree should the appeal fail. However, we do not think that, the circumstances of this case warrant ordering the applicant to pay the full decretal amount as security. Agreeing with the submission of Mr. Byenkya, such an order will no doubt defeat the purpose of the appeal. Inadequacy can be taken care of by ordering additional security to top up the certificate of title valued at Shs.75 million.

For the aforesaid reasons, we allow the applicant's application. We order that execution of the decree and orders in High Court Civil Suit. No.409 of 1995 be stayed pending determination of the applicant's intended appeal or further orders of this court. We further order that the applicant provides security by depositing into court certificate of title in respect of his land comprised in **Block 273 Plot 405 Kyadondo**, together with the sum of Shs.50 million in cash within 30 days hereof. Costs of this application shall be in the cause.

Dated at Mengo this...(e.th.......day of $\mathbb{R}$ )....................................

A. H. O Oder

**Justice of the Supreme Court**

A. N. Karokora Justice of the Supreme Court

J. A. Mulenga Justice of the Supreme Court

G. W. Kanyeihamba Justice of the Supreme Court

L. E. M. Mukasa-Kikonyogo Justice of the Supreme Court