Strogen Limited and Others v Vehicle and Equipment Leasing Ltd (Misc. Application No. 353 of 2025) [2025] UGCommC 128 (15 May 2025)

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISC. APPLICATION NO. 353 OF 2025 (ARISING FROM MISC. APPLICATION NO. 348 OF 2025)** 10 **(ALL ARISING FROM CIVIL SUIT NO. 194 OF 2017) 1. STROGEN LIMITED 2. FARM ENGINEERING INDUSTRIES LTD 3. TARANJEET SINGH PADHAAL ::::::::::::::::::::::::::::::::::: APPLICANTS**

### 15 **VEHICLE AND EQUIPMENT LEASING LTD :::::::::::::::::::: RESPONDENT**

# **BEFORE: HON. LADY JUSTICE PATIENCE T. E. RUBAGUMYA RULING**

**VERSUS**

#### Introduction

- 20 This application was brought by way of Chamber Summons under **Section 37 of the Judicature Act, Cap. 16, Section 98 of the Civil Procedure Act, Cap. 282** and **Order 22 rules 26 and 89(1) of the Civil Procedure Rules, SI 71-1**, seeking orders: - 1. Staying the execution of the decree in *Civil Suit No. 194 of 2017* 25 pending the disposal of *Misc. Application No. 348 of 2025* seeking to set aside the decree. - 2. That costs of this application abide the outcome of *Misc. Application No. 348 of 2025*.

#### 5 Background

The background of this application is contained in the affidavit in support deponed by **Mr. Taranjeet Singh Padhaal,** the 3rd Applicant and director of the 1st and 2nd Applicants, and is summarized below:

1. That the Applicants were not aware that the judgment in *Civil Suit*

- 10 *No. 194 of 2017* had been delivered in favour of the Respondent. - 2. That on 5th February, 2025, he was served with a notice to show cause why execution should not issue to which they instructed their new Counsel to take over the matter and establish what transpired 15 in the main suit. - 3. That it was established that the Applicants' previous lawyer had misled Court that he could not reach the Applicants and thus the 20 main suit proceeded ex parte and that the Respondent had commenced execution proceedings against the 3rd Applicant vide *Misc. Application No. 279 of 2024*. - 4. That there is imminent threat of execution as the Respondent has 25 sought the arrest and detention of the 3rd Applicant as a mode of execution. - 5. That *Misc. Application No. 348 of 2025* seeking to set aside the ex 30 parte judgment/decree has high chances of success and will be rendered nugatory if this application is not granted.

In reply, the Respondent through an affidavit deponed by **Ms. Babirye Joanita,** its Legal Officer, opposed the application contending that:

- 1. The Applicants had full knowledge of the proceedings in *Civil Suit* - 35 *No. 194 of 2017* since they filed their written statement of defence

- 5 on 8th May, 2018 and were well represented in the matter until their lawyer informed Court that he had lost contact with the Applicants. - 2. The Applicants' negligence and lack of vigilance in defending *Civil Suit No. 194 of 2017* cannot be visited on the Respondent. - 10

- 3. *Misc. Application No. 348 of 2025* has no likelihood of success since the application is an abuse of Court process, bad in law, illegal, incompetent and has no merit. - 4. The application to set aside the decree was brought 11 months after the judgment was delivered. - 5. It is in the interest of justice that the application is denied in favour - In rejoinder, the Applicants through an affidavit deponed by **Mr. Taranjeet Singh Padhaal,** reiterated their previous averments and emphasized that:

20 of the Respondent who is seeking to enjoy the fruits of her judgment.

- 1. It would be unfair and unjust to penalize the Applicants due to their previous Counsel's conduct. - 25 - 2. *Misc. Application No. 348 of 2025* has high chances of success and was brought in good faith without the intention to frustrate the Respondent.

## Representation

30 The Applicants were represented by **M/s JByamukama & Co. Advocates** while **M/s Amber Solicitors & Advocates** represented the Respondent.

Both parties filed their written submissions as directed and the same have been considered by Court.

#### 5 Issues for Determination

Following **Order 15 rule 5(1) of the Civil Procedure Rules**, and the case of *Oriental Insurance Brokers Limited Vs Transocean (U) Limited SCCA No. 55 of 1995*, the Court has rephrased the issues so raised to read as follows:

- 10 1. Whether an order of stay of execution in *Civil Suit No. 194 of 2017* should be granted? - 2. What remedies are available to the parties? - 15 In his submissions, Learned Counsel for the Respondent raised a preliminary point of law to the effect that the affidavit in support is riddled with falsehoods hence the application should be dismissed.

**Order 6 rule 28 of the Civil Procedure Rules**, is to the effect that a point of law that is pleaded when so raised is capable of disposing of the suit,

- 20 may by consent of the parties or by order of the Court on the application of either party, be set down for hearing and disposed of at any time before the hearing. It is therefore trite that where a preliminary objection is capable of disposing of the matter in issue, it is judicious to determine the objection before embarking on the merits of the case. (See: *Uganda* - 25 *Telecom Ltd Vs ZTE Corporation SCCA No. 3 of 2017*).

Guided by the above authorities, I shall proceed to resolve the preliminary objection so raised.

#### Whether the affidavit in support is riddled with falsehoods?

Learned Counsel for the Respondent submitted that in his affidavit in 30 support, the 3rd Applicant averred that he got knowledge of the judgment in *Civil Suit No. 194 of 2017* when he was served with a notice to show

- 5 cause why execution should not issue on 5th February, 2025 by Mr. Gerald Opero yet service of the said notice occurred on 23rd January, 2025 not 5th February, 2025 as alleged. That the Applicants had knowledge of the main suit since they filed their defence but chose not to produce their evidence despite several adjournments. - 10 That as was held in the case of *Ndejje University Vs E-Live International Services Ltd HCMA No. 1999 of 2024*, a false affidavit is construed as a positive assertion made with the intention to pass off a falsity and if possible, gain a positive assertion. Learned Counsel then contended that it is now trite that an application will be dismissed if the affidavit 15 supporting the application is false in relation to some material fact. That since the false averment made by the 3rd Applicant is very material to this application, then the application should be dismissed with costs.

#### Analysis and Determination

Under **paragraph 3** of the affidavit in support, the 3rd Applicant deponed 20 that he was served with the notice to show cause why execution should not issue on 5th February, 2025. To that, Learned Counsel for the Respondent contended that this is a material falsehood since the 3rd Respondent was served with the same on 23rd January, 2025 as per annexure **"E"** attached to the affidavit in reply.

25 Annexure **"E"** attached to the affidavit in reply is an affidavit of service in respect of the notice to show cause why execution should not issue under *EMA No. 279 of 2024* dated 11th February, 2025 and deponed by Mr. Olowo Gerald Opero. According to **paragraph 3** of the said affidavit of service, the 3rd Applicant was served with the notice to show cause on 23rd 30 January, 2025, and his Counsel was served the same on 11th February, 2025. In light of the aforementioned annexure **"E"**, which was not

5 contested by the Applicants, it is therefore false that the Applicants were served with the notice to show cause why execution should not issue on 5th February, 2025.

In the case of *Col. (RTD) Dr. Kizza Besigye Vs Yoweri Kaguta Museveni & Another Electoral Petition No. 1 of 2001*, the Supreme Court adopted 10 a liberal approach in dealing with affidavits that contain some falsehoods. **Odoki CJ** upheld the position that the false parts of an affidavit could be ignored and the rest of the averments considered. Therefore, considering that in the affidavit at hand, the Respondent does not dispute the facts relating to the service of the notice to show cause save for the date of the 15 service, this Court will ignore the date of service alleged by the Applicants. Since this is an application for stay of execution, ignoring the date of service of the notice to show cause being alleged by the Applicant, does not affect the crux of the application and thus does not necessitate the dismissal of the application.

- 20 Learned Counsel for the Respondent also contended that it is false for the Applicants to aver that they were not aware of the main suit, yet they filed their defence. I have carefully perused the affidavit in support and affidavit in rejoinder. Nothing therein speaks to the averment that the Applicants were not aware of the main suit. Under **paragraph 2** of the affidavit in 25 support, the 3rd Applicant avers that the Applicants were unaware that judgment in *Civil Suit No. 194 of 2017* had been delivered on 19th April, - 2024 by the trial Judge. The Applicants do not dispute having knowledge of the main suit but having knowledge of the judgment that was delivered in the main suit and that their previous lawyer had misled Court that he 30 could not reach the Applicants and thus the main suit proceeded ex parte. In the premises, this preliminary objection is overruled.

5 I will now proceed to determine the application on its merits.

# Issue No.1: Whether an order of stay of execution in *Civil Suit No. 194 of 2017* should be granted?

### Applicants' submissions

Learned Counsel for the Applicants first relied on **Section 98 of the Civil** 10 **Procedure Act, Order 22 rule 26 of the Civil Procedure Rules** and the case of *Peter Mulira Vs Mitchell Cotts Ltd HCMA No. 715 of 2009* for the principles that govern applications for stay of execution.

He also relied on the case of *Imelda Nandaula Vs Uganda Development Bank Ltd HCCA No. 47 of 1992*, which held that the principle to be 15 followed is whether substantial loss would arise from not granting the application for a stay of execution. Learned Counsel then submitted that in the present case, there is a pending decree by the Respondent that it seeks to execute against the 3rd Applicant by way of arrest and detention in civil prison. That the Applicants filed *Misc. Application No. 348 of*

20 *2025* seeking to set the said decree aside and it is still pending before this Court.

Learned Counsel further contended that it is not disputed that there is an imminent threat of execution vide *EMA No. 279 of 2024* wherein the Respondent seeks to arrest and commit the 3rd Applicant to prison as per

25 annexures *"B"* and *"D"* attached to the affidavit in support. That therefore, there is imminent threat of execution against the Applicants which, if not stayed, would render the substantive application to set aside the decree in *Civil Suit No 194 of 2017,* nugatory. That the Applicants have also demonstrated that they will suffer substantial loss if the application is not 30 granted since the execution will create a state of affairs that will irreparably

- 5 affect the Applicants' financial capacity as the sums claimed by the Respondent are enormous and the loss will not be undone once inflicted. That since the decretal sum in the application for execution is USD 1,283,765.93 and UGX 30,000,000/=, the Applicants will be financially crippled if the execution is allowed to proceed. - 10 That as per annexure **"E"** attached to the affidavit in support, the Applicants were prevented from leading evidence on account of negligence of their previous Counsel yet it is now settled that mistake of Counsel cannot be visited on the client and therefore, the application for setting aside the decree has high chances of success. - 15 Further, that the application was filed without inordinate delay since the Applicants learnt about the execution on 5th February, 2025 and instructed their new Counsel who filed this application on 24th February, 2025.

In conclusion, Learned Counsel for the Applicants prayed to Court to stay

20 the execution in *Civil Suit No. 194 of 2017.*

## Respondent's submissions

Learned Counsel for the Respondent first distinguished the cases relied upon by Learned Counsel for the Applicants and argued that there is no pending suit since a Miscellaneous Application does not qualify as a suit.

25 Learned Counsel then contended that in the case of *I. T. Office (U) Ltd Vs Tropical Bank Limited HCMA No. 617 of 2024*, Court guided that when adjudicating under **Order 22 rule 26 of the Civil Procedure Rules**, consideration has to be accorded to the following; the nature of the claim in the pending suit, the extent of identity between the Defendant and the 30 other party, the relationship (if any) between the claim giving rise to the - 5 judgment and the claim in the other pending suit, the strength of the claim in the other pending suit, the size of the claim in the other pending suit will be determined, the prejudice to the judgment creditor if a stay is granted and the risk of prejudice to the party making the cross-claim if a stay is refused. - 10 Relating the above to the case at hand, Learned Counsel submitted that the Applicants have no cross suit where either parties' claims can be adjusted or set off. That the Applicants have not demonstrated that the Respondent will be unable to refund the monetary decree in case the suit succeeds or that the suit has great merit, and to enforce the decree in the - 15 meantime will be ruinous to the Applicants. Further, that guided by the case of *I. T. Office (U) Ltd Vs Tropical Bank Limited (supra)*, for decrees involving pure monetary awards, the Applicant must show evidence that the Respondent is insolvent and would fail to reimburse the decretal sum and pay damages to the Applicant if the other pending suit were successful - 20 or that if the monetary decree if paid would go to a foreign jurisdiction where recovery of the same might be difficult and in the case at hand, no evidence was led to that effect. Regarding the issue of delay, Learned Counsel submitted that the Applicants filed their application 11 months after the judgment was issued, which depicts delay on the part of the 25 Applicants. Furthermore, that the Respondent, as the decree holder, will suffer great injustice if execution is stayed since it filed the suit in 2017

That the Applicants' failure to follow up with their lawyer at the time to establish the progress of the suit should not be visited on the Respondent, 30 who diligently prosecuted their matter and made efforts to serve the Applicants until the Court resolved to proceed ex parte.

and obtained the judgment in 2024.

## 5 Analysis and Determination

I have considered this application, the affidavit in reply and rejoinder, the submissions of both parties and the authorities therein.

**Order 22 rule 26 of the Civil Procedure Rules**, under which this application was brought stipulates that:

10 "*Where a suit is pending in any Court against the holder of a decree of the Court in the name of the person against whom the decree was passed, the Court may, on such terms as to security or otherwise, as it thinks fit, stay execution of the decree until the pending suit has been decided*."

- 15 The application is premised on the background that, the Respondent filed *Civil Suit No. 194 of 2017* against the Applicants for recovery of USD 1,283,765.93 being the outstanding interest on the rentals and early termination costs, UGX 76,155,250.62/=, being the costs incurred on the hired assets as well as interest, general damages and the costs of the suit. - 20 The Applicants filed their written statement of defence on 4th April, 2017; however, on 20th September, 2022, their Counsel informed the Court that he had failed to contact and locate them. Consequently, the Court ordered that the matter proceeds ex parte under **Order 17 rule 4 of the Civil Procedure Rules.** On 19th April, 2024, judgment was entered in favour of 25 the Respondent ordering the Applicants to pay USD 1,283,765.93, interest, general damages of UGX 30,000,000/= and costs of the suit. On 24th February, 2025, the Applicants filed *Misc. Application No. 348 of 2025* seeking to set aside the ex parte judgment and decree in *Civil Suit No. 194 of 2017,* and that *Civil Suit No. 194 of 2017* be set down for 30 hearing interparty.

- 5 In the cases of *Olivia da Ritta Siqueira E Facho Vs Siqueira [1933] 15 KLR 34*, and *Jadva Karsan Vs Harnam Singh Bhogal [1953] 20 EACA 74*, it was held that the inherent jurisdiction may be invoked to stay proceedings where the ends of justice require so or to prevent an abuse of process of the Court. - 10 Further, in the case of *Hon. Theodore Ssekikubo and 4 Others Vs The Attorney General and 4 Others Supreme Court Constitutional Petition No.04 of 2014*, the Court relied on its statements in the case of *Yakobo M. N Senkungu and Others Vs Cresensio Mukasa, Civil Application No.5 of 2013* and *Giuliano Gariggio Vs Claudio Casadio* - 15 *SC Civil Application No.3 of 2013*, that the granting of interim orders is meant to help the parties to preserve the status quo and then have the main issues between them determined by the full Court as per the Rules. It is settled law that the Applicant in such an application must prove that conditions exist to warrant the Court to exercise its discretion in his/her 20 favour. In granting such an application several authorities have provided the conditions to be relied on.

I have noted the submissions by Learned Counsel for the Respondent regarding the conditions to be considered in an application for stay of execution under **Order 22 rule 26 of the Civil Procedure Rules** as was

25 laid down in the case of *I. T. Office (U) Ltd Vs Tropical Bank Limited (supra).* However, I wish to state that the said case is distinguishable from the case at hand because, therein, the Applicant sought to stay execution in one civil suit pending the determination of another civil suit yet in the matter at hand, the Applicants seek to stay execution of the decree in a 30 civil suit pending the determination of an application to set aside the decree being subjected to execution proceedings. Therefore, the conditions

5 being relied upon by Learned Counsel for the Respondent do not apply to the case at hand.

I shall now consider the conditions to be fulfilled before granting an order for stay of execution.

a) The existence of a pending suit

- 10 As stipulated under **Order 22 rule 26 of the Civil Procedure Rules** and in the case of *Iddi Halfani Vs Hamisa Binti Athumani [1962] EA 761* it was held that no condition is imposed regarding the nature of the pending suit and it would mean any kind of suit brought by the unsuccessful against the successful party in the earlier suit whose decree 15 is being executed. In the matter at hand, the Applicants averred that vide - *Misc. Application No. 348 of 2025*, they filed an application seeking to set aside the decree sought to be executed in *Civil Suit No. 194 of 2017*. This application is pending determination. Therefore, there is a pending suit. - 20 b) That there is a serious or imminent threat of execution of the decree or order, and if the application is not granted, *Misc. Application No. 348 of 2025* would be rendered nugatory.

In the case of *Uganda Revenue Authority Vs East African Property Holding Limited Court of Appeal Civil Appeal No. 144 of 2014*, **Hon.** 25 **Justice Richard Buteera, JA** held that:

> *"There must be established by evidence a serious and imminent threat of execution of the decree or order and the evidence should be adduced that if the application is not granted, the main application and the appeal shall be rendered nugatory."*

- 5 In the instant case, it is undisputed that vide *EMA No. 279 of 2024*, the Respondent applied for execution of the decree in *Civil Suit No. 194 of 2017* by way of arrest and detention of the 3rd Applicant as per annexure **"D"**, an application for execution, attached to the affidavit in support. Also, according to annexure **"B"** attached to the affidavit in support, this Court - 10 issued a notice to show cause why execution should not issue against the Applicants.

Further, considering that in *Misc. Application No. 348 of 2025,* the Applicants seek to set aside the decree sought to be executed vide *EMA No. 279 of 2024*, then *Misc. Application No. 348 of 2025* will be 15 rendered nugatory if execution is not stayed.

In the premises, this Court is convinced that there is a serious and imminent threat of execution of the decree and *Misc. Application No. 348 of 2025* will be rendered nugatory if the execution is not stayed.

c) That substantial loss may result to the Applicants unless the stay of 20 execution is granted.

It is the Applicants' averment that they will suffer substantial loss if the application is not granted, since the execution will create a state of affairs that will irreparably affect the Applicants' financial capacity, as the sums claimed by the Respondent are enormous, and the loss will not be undone 25 once inflicted. On the other hand, Learned Counsel for the Respondent submitted that the Applicants have not adduced any evidence to show that the Respondent will be unable to refund the money, in case the decree is set aside.

However, in the case of *Eriabu Kabigiza Vs Lawrence Sserwanja [1975]*

30 *HCB 99*, it was held that the main criterion for staying execution should

5 be whether the judgment debtor would suffer substantial loss if the decree was executed, notwithstanding that the decree might subsequently be set aside.

Therefore, in light of the above, this Court is convinced that the Applicants will suffer substantial loss if the decree is executed.

10 d) The application has been made without unreasonable delay.

Learned Counsel for the Respondent submitted that the application was filed 11 months after the judgment in *Civil Suit No. 194 of 2017* was delivered, which depicts a delay on the part of the Applicants.

The Applicants aver that they were unaware that the judgment in *Civil*

15 *Suit No. 194 of 2017* had been issued. That, when they were served with the notice to show cause why execution should not issue, their new lawyers established that execution had even commenced. According to the evidence on the Court record and the Respondent's averments, the Applicants were served with the notice to show cause, annexure **"B"** 20 attached to the affidavit in support, on 23rd January, 2025, and their

lawyer was served with the same on 11th February, 2025. This application was filed on 25th February, 2025.

Since this application was filed on 25th February, 2025, after the Applicants and their Counsel were served with the notice to show cause 25 on 23rd January, 2025 and 11th February, 2025, respectively, then I find that this application was filed without unreasonable delay.

e) Security for due performance of the decree

Learned Counsel for the Respondent submitted that if the application is granted, the Applicants should provide security for due performance of the 30 decree amounting to USD 1,283,765.93 within 14 days from the grant of

- 5 the application. In the case of *Joel Kato Vs Nuulu Nalwoga SC Misc. Application No. 11 of 2011*, the Supreme Court noted that in applications for stay of execution, the interest of justice would be better served if the status quo is maintained rather than the Court ordering the Applicants to deposit a substantial amount of money as security for the - 10 due performance of the decree.

In light of the above authority as well as considering the nature of this application and the fact that there is a pending application *Misc. Application No. 348 of 2024* seeking to set aside the decree in *Civil Suit No. 194 of 2017*, I decline to make orders for security for due performance

15 of the decree.

Issue No. 2: What remedies are available to the parties?

Considering that the Applicants have satisfied all the conditions for the grant of this application, the application is hereby granted with the following orders:

- 20 1. The execution of the decree vide *High Court Civil Suit No. 194 of 2017* is hereby stayed pending the determination of *Miscellaneous Application No. 348 of 2025*. - 2. Costs of this application shall be in the cause. - 25 I so order.

Dated, signed and delivered electronically via ECCMIS this **15th** day of **May**, **2025.**

30 Patience T. E. Rubagumya **JUDGE** 15/05/2025 6:55am