Sugar Corporation Of Uganda Limited v Kanoblic Group Of Companies Limited (Miscellaneous Application 653 of 1996) [1997] UGHC 15 (26 February 1997)

Full Case Text

$\overline{\mathbf{t}}$

$5$

$10^{-1}$

THE RIFUBLIC OF UGANDA

$\overline{1}$

IN THE HIGH: COURT OF SUGANDA AT KAMPALA

MISC. ATTLICATION NO. 653 OF 1996

SUGAN CORPORATION OF UGANDA LTD. •••••••••••• APPELLANT VERSUS

KAHORLIC GROUP OF COMPANIS LTD. .......... RESPONDENT Before: The Hon. Lady Justice L. E. M. Mukasa-Kikonyoro. $\frac{R\ U\ L\ I\ N\ G:$

This is an appoal brought under 0.46 rules 1. 7 and 8 of The Civil Proceduro Rules. It is secking an order of this court to set aside the certificate of interest issued by the Deputy Registrar Civil on 1st November, 1996 in favour of Kanoblic Group of Companies Ltd. hereinafter to be referred 15 to as the Respondent/Judgment Creditor. and to further direct that the interest awarded to the Respondent/Judgment/Creditor Arbitration Award No.7 of 1994 should be calculated at the rate of 30% pa.a and should not beenn basis of compound interest as per the said certificate of interest. 20

The appeal is supported by an affidavit sworn by Mr. Peter Mulira one of the counsel representing Sugar Corporation of Uganda Ltd. Scoul hercinafter to be called the appellant/Judgment Debtor and also based on the affidavit of M. M. Hedge the Company Secretary of the appellant Judgment/Debtor. 25

The matter before court has rather a chequered background. Briefly the Respondent/Judgment/Creditor is Arbitration award No.7 of 1994 obtained an award in its favour against the appellant/Judgment/Debtor in the following terms: (i) Shs. 45.475.341/ $\equiv$ special damages 30 (ii) Shs.10.000.000/= General damages (iii)interest on (i) and (ii) at the rate of 30% pa.a from 1.10.92 till payment in full. $\sim$ .

$11.1/28$

Costs of the arbitration

$\mathbf{S}$

Dissatisfied with the terms of the award, the appollant/Judgment Debtor instructed its counsel at that time Mr. Kaggwa of Mugerwa & Matovu & Co. Advocates to file an application under S.12 of The Arbitration Act and Rules 7, 8 and 16 of The Arbitration Rules S.1 55 - 1) to set aside the award. It was dismissed with costs by this court.

Following the dismissal M/s Barya and Byamugisha and Co. Advocates representing the Respondent/Judgment Creditor proceeded to carry out execution. Before the execution was carried out, the appellant/judgment debtor through its new counsel Mr. Mulira filed two applications in this court. One applications was for stay of execution under 0.19 rule 26 of the Civil Procedure Rules whilst the second one was seeking an order of this court to set aside the dismissal order to set aside the Arbitration award dated 2/5/95. Both applications were dismissed on 20.7.95.

However, on the application by Mr. Mulira leave was granted to the appellant/Judgment. Dobtor to appeal to the Supreme Court on condition that security was deposited into In compliance with the courts order ShallO. $\texttt{court.}$ Shs.130.448601/= by way of bank draft was deposited into 25 The appeal was, again, dismissed with costs court. to the Respondent.

Judgment/Creditor failing the dismissal of the appeal the Doputy /Registrar Civil of this court paid the 30 security amount of Shs.130.448.601/= to the Respondent/ Judgmont Creditor in settlement of the Dooretal amount and interest owed by the appellant/Judgment Debbor.

The above payment notwithstanding, on 3/10/96 the the learned counsel for the Responent/Judgment/Creditor wroto to the Doputy Registrar a letter marked $.../29$

$10$

$1^{\circ}$

5 10 letter. It was reading as guided by one official Cooperative Bank as per attached to the Acting on the said calculations the Deputy Registrar Civil proceeded to issue the certificate of interest dated 1st November, 1996. as follows: Annoxture »Ar to the affidavit of M. D. Hedge the Company Secretary of the appollont/judgment/Debtor. It v/as ^itcr alia seeking for payment to the Responeat/Judgmcnt /Creditor Shs.62.233-667/= by the appcllant/judgjncnt/ Debtor being money still duo as a result of calculations of compound interest made by the counsel for the Ro sponent/*J*udgmont Creditor from the

C»

20 The counsel for the taxation was verbally informed. ''This is to certify that in accordance with the • Arbitration Award dated 23rd day of January, 1995 compound interest on Shs. 519\* 308846 at the rate of 3O;S per annum from. 25th May 1995 till September, 1996, is Shs.62.233\*667/= which is duo from the Rosponodnt (Judgmont/Dobtor) to the applicant (Judgment/Creditor) " appollant/judgmcnt Debtor were not given a copy of the letter, although it was claimed Mr. Mike Musisi an advocate who represented them at

eccdings. Following the issue of the said certificate of interest the counsel for the Responont/Judgment Debtor filed an exparte Chamber Summons under. 0. 20. rules,J and 10 of The Civil Procedure Rules for Garnishee Pro-A decree Nisi returnable on 13/11/96 was issued to be served on both the Bank of Baroda (U) Ltd. hereinafter to be called the Garnishee and the Rcsponent/Judgmont Debtor.

Y/lion the matter was placed before court on 13-11\*96 Ilr. ncstcr Byamugisha who on that day represented the Rospondmt/Judgment/Crcditor intimated to this court that he had discussed the matter with the counsel^

OT5.-'. — -

for the appellant/Judgment Debtor and the had agreed to settle the matter emicably. He therefore asked the court r to adjourn the application to enable them to finalise the set lement. Mr. Mukasa who on that day appeared for the appellant/Judgment/Debtor in reply appeared to have suggested that had they seen the letter to the Deputy Registrar dated 3/10/96 which precipitated the Gamishee proceedings, the $1\degree$ matter would not have come to court, but settled.

The Garnishee was represented by Mr. Magezi who told court that the Garnishee was not in a position to pay the monies on the appellant/Judgment Debtor's account with the Garnishee to the Responent/Judgment/Creditor. Since there 15 was a likelihood of an amicable settlement the Garnishee proce dings were adjourned to 18.11.96. The court rejected Mr. Magezi's request for costs as the Garnishee would have had to appear before court any way to show cause. Why the Gamishee should not pay the monies the appellant's 20 account to the Respondent.

On 18.11.96 Dr. Barya appeared for the Respondent/Judgment/Co. Creditor, whilst Mr. Tumusingize represented the Appellant /Judgment Debtor. Mr. Magezi appeared for the Gamishee. Instead of recording a settlement reached upon by the parties Mr. Turmsingize told the court that when they return-25 ed to their chambers they realised that Shs. 62.233.667/= which was the subject matter of the Garmishee proceedings was not due to the Respondent/Judgment/Creditor. They had noticed that it had applied compound interest instead 30 of simple interest. The counsel for the Appellant/ Judgment Debtor explained that The Arbitration award spoke of 30% interest per annum and in those circumstances interest had to be simple and not compound based on the Deputy Registrar's certificate of interest issued in the 35 absence of the counsel for the appellant/Judgment/Debtor. $\cdot \cdot \cdot / 31$

As for tas they were concerned the total amount roof interest at the time payment in full was effected was supposed to be Shs.66.570.408/= that is as from October, 1992 to September, 1996. At the time of the payment, the award decretal amount and interest owing stood at Shs.122.045.749/ $=$ only. The appellant/Judgment/Debtor having deposited into court Shs.130.448.601/= as security w which was paid to the Respondent/Judgment Creditor there was an excess payment of Shs. 8.403.193 which was refundable to the appellant/Hudgment/Debtor.

$\ddot{\text{c}}$

It was explained that when Mr. Mukasa conceded to the adjournment for the purposes of negotiating a settlement, the counsel for the appellant/Judgment/Debtor honestly :believed that there was still money owing to the Respondent/ Judgment/Creditor which they subsequently found was not the case. Without compounding the interest there would not have been any money due and owing to the Respondent/Judgment Creditor. This court it was submitted could not enforce $22$ an illegality as the provisions of section 26 (2) of The Civil Procedure Act were clear. The court was further referred to the case of G. K. Patel Vs. Spear Motors Ltd. Civil Appcal No.4 of 1991. While Mr. Tumusingize submitted was the authority for the proposition that where compound $\hat{z}$ : $\frac{1}{2}$ . interest is argued and determined then the interest in the judgment is deemed to be simple.

Mr. Tumusingre, hence, asked the court to defer the ruling on the order for decree Absolute in the Garnishee proceedings and first hear and determine the present appeal $\mathbb{C}\mathbb{C}$ under 0446off. The Mivil Procedure Rules now before court.

Dr. Barya who appeared for the Respondent/Judgment/ Creditor on that day asked the court to reject the submissions of the counsel for the Appellant/Judgment/Debtor but instead make Garnishee order Nisi absolute on the $\cdots$ /32

grounds stated in the affidavit sworn by Mr. Byamugisha in support of the Gamishee proceedings which clearly indicated that there was money still owing to their client, the Respondent/Judgment Debtor. Dr. Barya explained that the money deposited into court as security before and pending the appeal to the Supreme Court was the money owing to the Respondent/Judgment/Creditor from the arbitrator's award and based on compound interest. WHERE ARE '. $10$

Dr. Barya pointed out that it was not disputed by the appellant/Judgment/Debtor that the Respondent borrowed money from the Nile Bank which carried interest. Further compound interest was not disputed at the time of the 15 award was made or at the time of the application for setting aside the award or in the Supreme Court yet it was clearly implied. It was the strong contention of the counsel for the Respondent/Judgment Creditor that. compound interest had been acquiesced and therefore the 20 matter was res judicata. It would be an abuse of the court process to re-open it. The court was referred to the case of RocMaria (1989) 1 ALL ER 229. The issue of illegality did not arise therefore.

Further it was contended that Mr. Kaggwa who represented the appellant/Judgment/Debtor at the time the award was made 25 agreed to the interpretation of the awarded interest to have been apparently by implication compound interest and not simple interest.

Having listened to both counsel for the parties this court granted the application by Mr. Tunusingize to defer the 30 in the Garnishee proceedings with regard to the Ruling on Decree order absolute pending the disposal of this appeal. Mr. Byomugisha who appeared on 29.11.96 when this appeal was placed before this court for hearing had no objection to the with-drawal of the notice of appeal providing 35 $.../33$

his client was awarded costs.

Tlie ruling on costs was deferred and I decision in it. Respondent/judgment/Credi tor .5120,1 -Procedure . Rules, withdrawn now give my There is no justification for awarding the costs under Q.22 rule ,1 of The The notice of appeal which was was part of the present appeal. It was giving nobice thereof. It was in the best interest of the parties to hear and detemine the present appeal without fir disposing of the other applications which had been filed on behalf of the Appellant/judgment/Debtor\*

I will now view of certificate 2C When the appeal was placed before this court for hearing the counsel for either side made more or less the same subnissions, and of course relied on the same affidavits and other documentary evidence already referred to\* proceed to evaluate the evidence before court with a determing the issue befoi c court namely whether the of interest certify! ig compound interest payable to the Respondent/Judgment Creditor in the sum of 62.233.667/= was erroneously issued by the Deputy Registrar.

award. Thirdly the basis. It was tile contention of both Dr. Barya and Mr. Byamugisha, learned counsel representing tlie Respondent/Judgment Creditor firstly that compound interest was implied in the Arbitrator's 2"; Secondly they argued that the appellant/Judgmcnt/Dcbtor had acquiesced by not raising any objection compound interest until the second Garnishee proceedings on 18.11.96. the appellant's foimor counsel Mr. Kaggwa had consented to interpretation given to the arbitraror's award which implied compound interest and infact payment had been made on that

The arbitrator in his award at p.15 of the award stated inter alia that,"The applicant also claimed interest on the claimed accounts at the rate of 30\*;' from 1st October 1992 **• ••/34**

**I**

**33**

. I

**35**

**r**

'till payment in full. address The transaction was a commercontempiated in ciroum- iic I, monies awarded herein at the rate of 30\$ from 1st October 1992 till payment in full and costsM. • case a party fails to pay the other.. In the stances I find that interest is payable on the monies the Respondent owes to the applicant as awarded herein, therefore, award interest on the The Respondent did not no on the question of interest\* The claim by the applicant is for the delayed payments and non payments of monies on a contract. The source of money was the banic which charges interest. cila transaction in which interest was

**34** \*

Clearly there ig no where compound interest is awarded expressly. I am also unable to see how it is implied. All that the award talks about is interest at the rate of 30\$ from 1st October 1992 as calculated by the appellant/Judgment/Debtor\*

**I** 20 the interpretation which implied compound interest, the one difficulty is that the said Mr. Kaggwa is no longer representing the appellant/Judgment debtor. He is It would affidavit in interest both Mr. Mulira and Tumusinguzi Consent the Jias it was rightly submitted by for the appellant/tTudgraent/Debtor. partener of the cotinsel for the appellant. appear that may explain whyl -J there was no reply. That notwithstanding even if Mr. Kaggwa had consented to the interpretation implying applying compound neither a **29** It was also argued by both learned counsel for the Respondent/Judgment/Creditor that Mr. Kaggwa consented to of the parties in tlie circumstances of this case especially subsequent to the award could not entitle Respondent/Judgment/Oreditor to compound interest which had not been awarded at the time the award was made. **• 35**

or the interest was not It was after a careful came to that conclusion. came before court 10 **withdrawn.** cited by Mr. Byornpi'. 15 case. As regards the judicata. compound interest was not an issue although it was submitted that it almost became an issue in an application which was The,, case of Re Maira (1989) 1 Abb E. R. 229 Byamugisha, is in my view as submitted by Mr. Mulira distinguishable from the present acquiescence or the matter being res— Mr. Tumusingizi clearly admitted that it had no u occurcd to them that that compound payable but simple interest, study of the award that they failure to raise the matter at earlier stages in my view should not be taken as a serious omission because each time the matter

As the calculations shown by the counsel for the appallant/Judgment/Debtor should the decretal amount to the 20 together with the awarded interest had already been paid Rcspondent/Judgment/Creditor- from the security deposited into court. It follows, therefore, that the Deputy Registrar's Certificate of interest dated 1st November 1996 should not have been issued. It is hence, set aside.

the of the decretal amount inclusive further the Respondont/judgment/Debtor is hereby ordered to refund of interest in the sum of Shs.8.4-03\*193/= to the Appellant/Jud;gmcnt/Dobto r.

appellamt/ Further the order of attachment of the Judgment Debtor's account No.0150107032 kept with the Garnishee Bank of Baroda (U) Ltd is hereby set aside.

Let each party bear its own costs of both the Garnishee Proceedings and this appeal.

> (Sgd.) L. Tl.ld. **Mvkasa-Kikonyogo** J U D G 26.2.97

Dated day of pcbinary, 1997 • at Kampala this 26tn

Ruling delivered and signed.

Nobody for the appellant/Judgmeht/Dcbtor.

Respondent/Judgment/Creditor Mr. Nesta Bynmugisha for the 10

Mr. Magezi for the Garnishee.

Odongo Court Clerk.

## 26.2.97 (Sgd.) ' D. E. N. Mukasa-Kikonyogo JUD G E.