Suzan Nabirye and Another v Zedek Microfinance Limited (Miscellaneous Application No. 460 of 2025) [2025] UGCommC 100 (23 May 2025)

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL COURT DIVISION) MISCELLANEOUS APPLICATION NO. 460 OF 2025 (ARISING OUT OF EXECUTION MISCELLANEOUS APPLICATION NO. 610 OF 2024)** 10 **(ARISING OUT OF CIVIL SUIT NO. 691 OF 2023)**

**1. SUZAN NABIRYE**

# **2. SAMUEL LUMU:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::APPLICANTS**

### **VERSUS**

15 **ZEDEK MICROFINANCE LIMITED::::::::::::::::::::::::::::::::::::::::::::::RESPONDENT**

**Before: Hon. Lady Justice Dr. Ginamia Melody Ngwatu**

# **RULING**

- 20 The applicants brought this application by way of notice of motion under section 98 of the Civil Procedure Act, Order 43 rule 4 and Order 52 rules 1, 2 and 3 of the Civil Procedure Rules S. I. 7l-1, as amended. The application seeks orders that: - 1. Execution of orders in *Civil Suit No. 691/2023* be stayed pending hearing of review application *Miscellaneous Application No. 1911/2024*; - 25 2. Costs of the application be provided for.

The background to this application is that the respondent filed *Civil Suit No. 0691/2023 Zedek Microfinance Limited* vs *Suzan Nabirye & Samuel Lumu* to recover a total sum of Ugx 178,000,000 that it claimed it had lent the applicants. The applicants filed Miscellaneous 30 Application No0. 2009/2023 for leave to appear and defend the said suit. The court entered judgment on admission of Ugx 137,000,000 as it was the amount that the applicants acknowledged receiving; and an interest of 16% per annum from the date of judgment and the application dismissed with costs to the respondent. The *Civil Suit No. 0691/2023* proceeded *expart*e for formal proof in respect to the interest accrued on the principal. Court awarded the 35 respondent herein, the accrued interest of Ugx 96,360,000 as interest accrued on the principal sum of Ugx 137, 000, 000. Costs of the suit were also awarded to the respondent. The applicants subsequently filed this application seeking stay of execution of the judgment and orders made in *Civil Suit No. 691 of 2023* in regard to the interest rate of 6.5% per month that had accrued on the principal sum, on the ground that it was unconscionable.

- 5 The grounds of the application were stated in the affidavit of the first applicant, Suzan Nabirye, which was consented to by the second applicant, and are briefly that: - 1. Judgment on admission of Ugx 137,000,000 was entered against the applicants who were the defendants in *Civil Suit No. 691/2023*, for payment to the respondent. - 2. The matter was set for formal proof and heard *exparte*, wherein court awarded the 10 respondent an interest rate of 6.5% per month; which accrues to 78% per annum. - 3. Being dissatisfied with the payment of the high interest rate, an application for review of the ruling was filed. - 4. The review application, *Miscellaneous Application No. 1911/2024*, has grounds that merit judicial consideration by the Judge. - 15 5. The review application is pending hearing before a High Court Judge and has a likelihood of success. - 6. For the attainment of the ends of justice, any execution should be stayed pending the hearing of the review. - 7. If the execution is not stayed, the review will be rendered a nugatory - 20 8. The application was made without any delay.

The respondent opposed the application on the grounds contained in the affidavit in reply of Ahimbisibwe Melchizedek, wherein he stated, among others, that:

- 1. The interest of 16% per annum was awarded on the admitted sum of Ugx 137,000,000 by 25 the applicants from the date of judgment until payment to the respondent/plaintiff. - 2. The court was satisfied with the additional evidence in respect to the interest rate of 6.5% on the principal amount borrowed by the applicants. - 3. The application for review has no chance of success as the trial judge exercised her discretion to uphold interest of 6.5% on the loan acquired by the applicants. - 30 4. The applicants' application for stay of execution does not meet the legal and factual threshold for the grant of the orders sought. - 5. The application is *malfide* and intended to delay the respondent from enjoying the fruits of the judgment in *Civil Suit No. 0691 of 2023*. - 6. The applicants have refused to pay the admitted sum of Ugx 137,000,000 to the 35 respondent. - 7. The respondent has been denied use of its money and the accrued interest by the applicants for over two years with no justifiable reason and the court process is being used to frustrate the respondent. - 8. No compelling reason has been advanced by the applicants to justify staying the orders in 40 *Civil Suit No. 0691 of 2023*.

**Representation at the hearing**

5 The applicant/judgment debtor was represented by Mr. Denis Mwina of Mwina, Wananda & Co. Advocates; while the respondent/judgment creditor was represented by Mr. Mwesiga Philip of JByamukama & Co. Advocates. The parties were granted leave to file written submissions which are on the Court record.

#### 10 **Issue for determination**

The main issue for determination in this application is whether the applicant raises sufficient grounds for an order of stay of execution to be granted in *Civil Suit No. 0691 of* 2023 pending the hearing of the review application vide *Miscellaneous Application No. 1911/2024?*

# 15

### *Determination of court*

The submissions of the parties have been taken into consideration. The submissions will, however, not be reproduced here. This matter is decided as follows:

## *Issue 1: Whether this application raises sufficient grounds for an order of stay of execution?*

Stay of execution pending review of a decision is not expressly provided for under the Civil 25 Procedure Rules SI 71-1, as amended. This court, therefore, invokes section 98 of the Civil Procedure Act, cap 282 which gives the High Court powers to make decisions that ensure that justice is attained. Consideration of an application for stay of execution pending review, like in this instance, falls in such a category. It follows, therefore, that Order 22 Order 43 of the Civil Procedure Rules, as amended, will be applied.

Stay of execution is provided for under Order 22 rule 26 of the Civil Procedure Rules SI 71-1 which provides thus:

*"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* 35 *such terms as to security or otherwise, as it thinks fit, stay execution of the decree until the pending suit has been decided."*

Court, therefore, has the discretion to grant or deny a stay of execution even where the pending suit in issue is one for review.

- 40 Order 43 rule 4 (3) of the Civil Procedure Rules SI.71-1, as amended, provides for the conditions that ought to be satisfied before a stay of execution is granted and these include that: - 1. substantial loss may result to the party applying for stay of execution unless the order is made; - 2. the application has been made without unreasonable delay;

5 3. 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.

These considerations were cited in the *case of Hon Theodore Ssekikubo and Ors vs the Attorney General and Others Constitutional Application No. 03 of 2014.* The Court of Appeal in 10 *Kyambogo University vs Prof. Isaiah Omolo Ndiege, Civil Application No. 341 of 2013* broadened the grounds to include that:

- 1. there is serious or imminent threat of execution of the decree or order and if the application is not granted, the appeal would be rendered nugatory; - 2. the appeal is not frivolous and has a likelihood of success; - 15 3. refusal to grant the stay would inflict more hardship than it would avoid.

In consideration of the grounds raised by the applicants for a grant of stay of execution, it is found as follows:

20 *Substantial loss may result to the party applying for stay of execution unless the order is made* Under this ground, the applicants must demonstrate to court that substantial loss would be rendered to them if the stay of execution is not granted and execution occurs before the appeal is heard. In *Tropical Commodities Suppliers Ltd and Ors vs International Credit Bank Ltd (In Liquidation) (2004) 2 EA 331,* court stated that substantial loss does not represent any particular

25 amount or size for it cannot be quantified by any particular mathematical formulae. Court noted that substantial loss refers to any loss, great or small that is of real worth or value as distinguished from loss without a value or that which is merely nominal.

- The Counsel for the applicants submitted that, *Civil Suit No. 0691 of 2023* was heard *exparte* and 30 court awarded the respondent an interest rate of 6.5% per month and if calculated accrues to 78% per annum. That the applicants would incur a substantial loss if the orders in *Civil Suit No. 0691 of 2023* are not stayed. The applicants further stated that their application for review of the ruling seeks to have the interest rate of 6.5% reviewed to a normal commercial lending; and that if the execution is not stayed, the review will be rendered a nugatory since the respondent has already - 35 threatened execution.

Counsel for the applicants further contended that they will suffer an irreparable loss/injury if a stay of stay execution of the decree is not granted as the respondent will be left free to execute against the applicants basing on ruling that was passed against them without them having an 40 opportunity to be heard contrary to their constitutional right guaranteed under article 28 of the 1995 Constitution of Uganda, as amended.

Counsel for the respondent, to the contrary, submitted that judgment on admission of Ugx 137,000,000 was entered against the applicants; which fact has remained uncontested. Counsel

- 5 for the respondent relied on the case of *Kampala International University vs Housing Finance Company Limited Miscellaneous Application No. 0341 of 2013* where Justice Stephen Mubiru observed that 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. - 10 In this instance, it does not suffice to only show that there is a possibility of a loss being occasioned on the applicant; but rather it must be demonstrated that the harm caused to the applicant would not only be substantial, but also irreparable. It must be noted, however, that payment of a money decree is not a loss *per se*. In the instant case, the applicants' application for review that is pending hearing in this court is only challenging the Ugx 96,360,000 that was - 15 awarded as accrued interest on the principal sum from the date of default until the date of filing *Civil Suit No. 0691 of 2023* on the 19th day of July 2023. It has not been proved that substantial loss will result to the applicants since they would only be satisfying a money decree, which would not amount to loss or irreparable injury.

# 20 *The application has been made without unreasonable delay*

An application for stay of execution ought to be made within a reasonable time. The reasonableness or unreasonableness of the delay in filing such an application would be dependent on the circumstances pertaining to each case. In the case of *Kabarema Adonia vs Natukunda Marion Miscellaneous Application No. 0264/2021*, at page 7, Hon. Justice Joyce

- 25 Kavuma, having examined the record of *HCT-05-CV-CA-0043-2016*, found that the application had been brought without reasonable delay. The basis of this finding was that the decision of the court was made on 16th August 2021 and the application was lodged before the same court on 8th October 2021. - In this instance, the applicants received the court ruling on the 21st 30 day of February 2024 from which the review application was filed on 17th September 2024. The applicants stated in their affidavit in support of the application and submissions, that they were informed by their lawyers on the 26th February 2025, they were informed by their lawyers that a notice to show cause why execution should not issue had been served and fixed for 13th March 2025. That the notice 35 included a threat for the applicants' arrest; hence the application for stay pending the determination of the review, to protect the applicants' interests that was filed on 14th April 2025. The applicants contended that this confirms that there was no unreasonable delay in filing the application. - 40 In the instant case, a ruling was rendered by Hon. Justice Cornelia Kakooza Sabiiti in *Civil Suit No. 0691/2023* on 27 th February 2024; and the court decision upon formal proof on accrued interest on the principle, was rendered on 11th April 2024. An application for review of the said ruling was filed on 18th September 2024, five months later. The applicants' lawyers were served with a notice to show cause why execution should not issue on 26th February 2025 and

5 subsequently applied for stay of execution pending review of the ruling vide *Civil Suit No. 0691/2023*, on 14th April 2025. This application was filed in less than two months after issuance of the notice to show cause why execution should not issue. In the premises, I do not find that the delay in filing the application was unreasonable.

10 *There is a serious or imminent threat of execution of the decree or order and if the application is not granted, the appeal would be rendered nugatory* Under this ground, it is expected that there must be a direct and immediate danger of execution of the decree. The determination of whether or not a review will be rendered nugatory if a stay of execution is not granted is dependent on whether, if a stay is not granted and execution is 15 permitted to proceed, the effect will be reversible. The assumption in this instance is that any

- payment made to the respondent in execution of the decree would be reversible in the event that the applicant succeeded in the review. - Counsel for the applicant submitted that there is a threat of execution since the respondent had 20 filed for execution and a notice to show cause why execution should not issue was scheduled for 13th March 2025 and yet the orders of the court are being challenged in the review application; hence the need for stay of execution.

It is not in contention that a notice to show cause why execution should not issue was issued and 25 there was indeed a possibility of execution. This ground succeeds.

# **The application is not frivolous and has a likelihood of success**

Counsel for the applicants base this application on the view that the interest rate of 6.5% per month that they are required to pay on the principle sum, as decreed by this court was way 30 beyond the commercial bank lending rate. The applicants contended that they have a likelihood of success since the grounds raised in the review application merit judicial consideration and a refusal to grant the stay would inflict more hardship than it would avoid.

Counsel for the respondent disagreed that the review application has a likelihood of success and 35 relied on the case of *Behange Jennifer vs School Outfitters (U) Ltd (2000) 1 EA 20* where court held that under the doctrine of freedom of contract, the parties will be held to whatever bargain they reach under their contract. The respondent submitted that the applicants in the instant application voluntarily executed a loan agreement with the respondent and the review application is a desperate attempt by the applicants to delay and frustrate the respondents from enjoying the

40 fruits of the judgment. Counsel for the respondent relied on the case of *Kampala International University vs Housing Finance Company Limited Miscellaneous Application No. 0559 of 2025* where court observed that a presumption lies in favour of the integrity of the proceedings of any court of general jurisdiction. In this instance, a court acting within its jurisdiction and has acted


5 impartially and honestly and with integrity a final judgment of a court of general and competent jurisdiction is always presumed to be right.

Counsel for the respondent further submitted that the applicants had not demonstrated disruption or hardship they would suffer if execution is not stayed. Counsel for the respondent contended 10 that it had been denied the use of its money and accrued interest by the applicants for over two

years with no justifiable reason.

Under this ground of the application, the applicants have indeed not demonstrated that they have a likelihood of success or how they would suffer hardship or disruption if the execution is not 15 swayed. Merely stating that an interest of 6.5% ought to be reviewed to reduce it to a normal commercial rate does not amount to proof of likelihood of success.

In consideration of the submissions made by both counsel for the applicants and the respondent; and the law pertaining to applications for stay of execution pending an appeal, I find that the 20 applicants have partly proved the grounds that entitle them to a stay of execution. In the case of *DFCU Bank Ltd vs Dr. Ann Persis Nakate Lussejere, C. A Civil Appeal No. 29 of 2003,* the Court of Appeal recognized that an applicant seeking stay of execution of a decree of the High Court **may** be required to satisfy the conditions as set out in Order 43 rule 4(3) of the Civil Procedure Rules; which means that it is not mandatory that all the conditions set out in Order 43 25 rule 4(3) must be met before an application for stay of execution is granted.

Under the circumstances in this particular application, the issue that should be addressed is whether the applicants should be required to deposit security for due performance of the decree.

30 *Issue 2: Whether the applicants should deposit security for the due performance of the decree* An application for stay of execution may be required to provide security for due performance of the decree. Hon. Justice Dr. Flavian Zeija, cited the case of *Hon. Theodore Ssekikubo and Ors vs the Attorney General and Ors Constitutional Application No 03 of 2014*, in *John Baptist Kawanga versus Namyalo Kevina & another Miscellaneous Application No. 12/2017*, while 35 considering the issue of security for due performance stated that:

*"… every application should be handled on its merits and a decision whether or not to order for security for due performance be made according to the circumstances of each particular case…the decision whether to order for security for due performance must be made in consonance with the probability of the success of the* 40 *appeal."*

The court, in this instance, has discretion to determine a just and fair amount of security, in consideration of all the circumstances of the case. The determination of a fair amount of security to be deposited should, however, not be done with a view to frustrating a review.

5 In *DFCU Bank Ltd vs Dr. Ann Persis Nakate Lussejere, C. A Civil Appeal No. 29 of 2003,* the Court of Appeal recognized that an applicant seeking stay of execution of a decree of the High Court may be required to satisfy the conditions as set out in Order 43 rule 4(3) of the Civil Procedure Rules, which includes the fulfilment of the condition that security has been given by the applicant.

Counsel for the applicant relied on the case of *Sewankambo Dickson vs Zziwa Abby Miscellaneous Application178/2005* to express their willingness to give security for performance of the decree but that the security should not be for the entire decree. Counsel for the applicants stated in their affidavit in rejoinder that they have always been ready to settle the respondent's 15 money and that the respondent was already in possession of two certificates of title which were given as security for the loan, that is, land comprised in Busiro Block 258 plot 246 Wakiso measuring 2 acres registered in the names of the applicants, Mityana Block 520 Plot 18, Mpanga Gobelo measuring twelve (12) acres; and that the applicants are also willing to give the respondent another piece of land comprised in Busiro Block 273 Plot 547 Wakiso and are ready 20 to deposit the certificates of title in court as security for due performance of the decree, until the review application is disposed of.

Counsel for the respondent submitted that no valuation report for the land was attached which would inform court of the market value of the land. The said land is not registered in the names 25 of the applicants but a third party. That the sale agreement indicates that the consideration of the land is Ugx 120,000,000 which demonstrates that it is not a priority for the applicants to pay the respondent. Counsel for the respondent further submitted that the proposed security for due performance by the applicants is intended to hoodwink court into granting a conditional stay of execution. The respondent prayed that court directs the applicants to pay the uncontested sum of

30 Ugx 137,000,000.

When considering a grant of an order of stay of execution pending review, such as this, the court has to balance between the need to uphold the respondent's right to enjoy his fruits of litigation and the applicant's right to access the courts to seek remedies. It is observed that the applicants, 35 undertook to pay security for due performance of the decree although the proposal is not concrete. What is clear is that the applicants do not wish to pay security that is of the same value as the decree.

It is also observed that much as the applicants are only disputing the award of interest of 6.5% on 40 the principal sum that court awarded, the applicants have, however, not paid the Ugx 137,000,000 that they admitted. It should be borne in mind that the judgment in *Civil Suit No. 0691/2023* was entered on 21st March 2024. Some effort should have, therefore, been made by the applicants towards paying-off the uncontested sum in the last one year; but no attempt was made.

## 5 *Issue 3: Whether there are any remedies available to the parties?*

Court must balance between the interests of the respondent, who was the successful litigants in *Civil Suit No. 0691/2023* and would wish to execute the decree; and the interests of the applicants who were the unsuccessful litigants and wish to have the execution in the aforementioned civil suit stayed pending determination of the application for review.

This court has the discretionary power to determine whether a stay of execution should be granted or not; and is clothed with inherent powers as provided under section 98 of the Civil Procedure Act to make orders that are necessary for the ends of justice; which includes a grant of an order of stay of execution. The court has a duty in the exercise its discretion to grant stay of 15 execution of this decree, to balance the equities between the parties and ensure that no undue hardship is caused to a decree holder due to the stay of execution of such decree.

In the final result, this application is granted with the following orders:

- 1. A stay of execution of the decree vide *Civil Suit No. 0691/2023* pending disposal of the 20 application for review vide *Miscellaneous Application No. 1911/2024*. - 2. As a pre-condition for the stay of execution, the applicants shall satisfy the uncontested Ugx 137,000,000 that was granted to the respondent on judgment on admission; and deposit before this court 30% of the disputed accrued interest on the principal sum as security for due performance of the decree; or a bank guarantee of the same sum, within 25 30 days from the date of delivery of this ruling. - 3. Costs will abide the outcome of the review.

I so order.

*Dr. Ginamia Melody Ngwatu Ag. Judge 23rd May 2025*

35 *Ruling delivered via ECCMIS*