Teopista & Jesus Holdings Limited & 2 Others v Cairo Bank Limited (Miscellaneous Application 950 of 2023) [2024] UGCommC 238 (12 August 2024)

## 5 **THE REPUBLIC OF UGANDA**

#### **IN THE HIGH COURT OF UGANDA AT KAMPALA**

## **(COMMERCIAL DIVISION)**

#### **MISCELLANEOUS APPLICATION NO. 0950 OF 2023**

# **(ARISING OUT OF CONSOLIDATED MISCELLANEOUS APPLICATIONS NO. 1605** 10 **OF 2022 AND 1606 OF 2022)**

#### **1. TEOPISTA & JESUS HOLDINGS LTD**

**2. MARIA NTEGANYI :::::::::::::::::::: APPLICANTS**

**3. TEOPISTA NABBALE**

#### **VERSUS**

15 **CAIRO BANK LTD ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT**

#### **Before: Hon. Lady Justice Harriet Grace Magala**

#### **Ruling**

#### **Background**

The Respondent filed Civil Suit No. 949 of 2022 against the Applicants, by

20 summary suit for recovery of UGX 9,119,312,433/-, arising out of a loan facility advanced to the 1st Applicant. The Applicants filed Miscellaneous Applications No. 1605 of 2022 and No. 1606 of 2022 for leave to appear and defend Civil Suit No. 949 of 2022. These applications were later consolidated.

This Court on the 17th of May 2023, entered judgment against the Applicants for

25 a sum of Ugx. 5, 038,066,702/- and allowed the Applicants to file a defence in respect of the difference of the claim against them.

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5 The Applicants now file this Application to stay of execution of the orders or Decree in Miscellaneous Applications No. 1605 of 2022 and No. 1606 of 2022, and costs of this Application be provided for.

# **Hearing and Representation**

When this Application came for hearing, the Applicants were jointly represented 10 by M/s Murangira Kasande & Co. Advocates and M/s Tamale & Co. Advocates; while the Respondent was represented by MMAKS Advocates. The parties filed their respective written submissions, and this court has duly considered them.

## **Preliminary Objections**

The Respondent raised two preliminary objections. One, that there was no 15 valid appeal because the Applicants had no right of appeal and has not sought leave to appeal the decree in Civil Suit No. 0949 of 2022. Second, that there is no notice of appeal filed on the ECCMIS record in civil suit No. 0949 of 2022.

However, during submissions counsel for the Respondent withdrew the second objection in the interest of justice.

20 The Applicants also raised two preliminary objections. The first was that the affidavit in reply was filed out of time. The second was that the deponent of the affidavit in reply did not attach proof of authorization to depose the affidavit, she did not attach a copy of her national identity card and that she did not state that she was of sound mind.

## 25 **Determination of the preliminary points of law**

Learned Counsel for both parties vehemently submitted on the preliminary objection regarding the competence of the purported Appeal from the Decree

5 in Civil Suit No. 949 of 2022 and Misc. Applications No. 1605 of 2022 and No. 1606 of 2022, and the fact that this Application is one for stay of execution of the said Decree.

#### There is no valid appeal

The position of the law is that institution or pendency of an appeal does not *per* 10 *se* stay an execution of a decree. In *Kyambogo University vs Prof. Isaiah Omolo Ndiege Court of Appeal Civil Application No. 341 of 2013* the Court of Appeal observed that:

*"In my view the law recognizes that not all orders or decrees appealed from have to be stayed pending appeal. It also recognizes a fact that an* 15 *appeal may be determined without the court having to grant a stay of execution. However, court may stay execution where the circumstances of the case justify such a stay. It is therefore incumbent upon the applicant in every application of stay of execution to satisfy court that grounds exist for grant of a stay of execution. The assumption that once a* 20 *party has filed an appeal a stay of execution must follow as a matter of course has no legal basis."* (Emphasis is mine)

From the above excerpt, it is therefore clear that the institution or pendency of an appeal does not, by itself stay execution of a decree. The Applicant must however prove to court that there exist grounds for stay the execution of such

25 decree. The Court would then exercise its discretion and stay the execution of the Decree.

Learned counsel for the Respondent submitted that an appeal is a creature of the statute and **Order 44 rule 1 (2) of the Civil Procedure Rules** provides that an appeal shall not lie from any other order except with leave of court making the

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- 5 order or of the court to which an appeal would lie if the leave were given. The Respondent's counsel relied on the case of *Kibalama Mugwanya Versus Butebi Investments Ltd CACA No. 190 of 2013* where the Court of Appeal observed that a default judgment is not appealable because it is not a judgment on merits. Also cited and relied on by the Respondent was the case of *Andrew Kibirige Versus* - 10 *Haruna Kato HCMA No. 920 of 2013* where Hon. Justice Christopher Madrama (as he then was) observed that a decree under **Order 36** of the **Civil Procedure Rules** is not appealable.

In reply, counsel for the Applicants submitted that **Order 44 of the Civil Procedure Rules** being relied on by the Respondent dealt with orders and not

15 decrees. That **Order 36 Rule 3(2) and 5 of the Civil Procedure Rules** being relied on by the Respondent deals with default judgments and, where leave is not granted, therefore not applicable.

It is trite law that an appeal is a creature of statute. Therefore, there is no express right of appeal, unless such right is created by a specific statute. Otherwise, the

20 appellant/Applicants must seek leave to appeal any such order outside the ambit of creature of statute.

The Respondent's learned counsel reiterated its earlier submission that **Order 44 of the Civil Procedure Rules S. I-71-1**, as amended establishes an appeal as of right from the orders specified therein. Orders made under **Order 36 of the Civil**

25 **Procedure Rules** are not among the Orders where an appeal is as of right. The appellant must then seek leave.

The current appeal is from orders made by the court in Miscellaneous Application No. 1605 of 2022 and No. 1606 of 2022. The Orders were that:

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- 5 *a) Judgment is entered against the Applicants/Defendants for the payment of Ugx. 5,038,066,702/=.* - *b) The Applicants are granted leave to appear and defend the difference of the claim against them by the Respondent.* - *c) The Applicants should file their written statement of defence within 14* 10 *(fourteen) days from the date of delivery of this Ruling.*

Whereas there is no Memorandum of Appeal attached to this Application to state the grounds of the Appeal, the Notice of Appeal attached as Annexture "B" indicates that the intended Appeal is against the whole of the decision of this court delivered on 17th May 2023.

- 15 **Section 2 (c) of the Civil Procedure Act cap. 282 (formerly cap 71)** defines a decree as a formal expression of an adjudication which, so far as regards the court expressing it, conclusively determines the rights of the parties with regard to any of the matters in controversy in the suit and may be either preliminary or final. - 20 The determination in entering judgment against the Applicants/Defendants for a sum of Ugx. 5,038,066,702/- was reached after court established that the Applicants never doubted the indebtedness and they admitted being indebted to a tune of Ugx 5,038,066,702/-, according to their computations. This was not a final determination of the matters in controversy between the Parties since - 25 the Applicants were granted leave to file a defence in respect of the disputed amount of **Ugx. 4,081,245,731/=.**

My finding partially determined the rights of the parties regarding the matters in controversy i.e. that the Applicants were indebted to a tune of Ugx 5,038,066,702/- against the Respondent, hence a decree. The determination, in

30 my opinion need not be on the whole matters involved in the suit but a matter or matters that involve rights of the parties. In the case of *Hwan Sung Ltd*

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5 *Versus M and D Timber Merchants and Transport Ltd SCCA No. 02 of 2018*, **Hon. Justice Nshimye A. S** observed that, if an order has the characteristic and consequence of bringing a whole suit to finality, it is a decree within the meaning of **Section 2 (c) of the Civil Procedure Act** and is therefore appealable as of right. Similarly, **Hon. DCJ Buteera Richard** in the above case, *Hwan Sung*

10 *Ltd Versus M and D Timber Merchants and Transport Ltd* observed that:

*"The Judge's decision wholly determined the controversy between the parties since nothing remained to be heard by the court. I find that the High Court decision disposed of the suit conclusively and the decision was therefore a decree within the meaning of Section 2(c) of the Civil* 15 *Procedure Act though it was worded as an order. I would hold that the appellant therefore had a right of appeal against the decision and did not need to apply for leave to appeal to the Court of Appeal."* (Emphasis is mine)

My understanding is that the order entering judgment of Ugx 5,038,066,702/-

- 20 against the Applicants determined their liability to the Respondent in finality, in respect to the above sum, and therefore a decree, which can as well be executed, irrespective of the further findings of the court regarding the disputed amount. Decrees or any part of the decree, are appealable under **Section 66 of the Civil Procedure Act**. In the circumstances, the Applicants 25 need not seek leave to appeal the decision in Miscellaneous Application No. - 1605 of 2022 and No. 1606 of 2022.

# Affidavit in reply was filed out of time

The Applicants' counsel made no submission on the issue of filing of the Affidavit in Reply out of time. According to the court record, the Affidavit of

- Service indicates that the court summons was served on the 11th 5 October 2023 onto the Respondent's advocates, MMAKS Advocates. But the Affidavit in Reply on record was filed on the 1st November 2023 which was six days out of the prescribed time of fifteen days from the date of service. That notwithstanding, I am inclined to allow the Affidavit in reply in the interest of justice and - 10 determining the matter to its finality by invoking section 98 of the CPA and section 33 of the Judicature Act. A delay of six (6) days is not inordinate. In the case of *Kuluo Joseph Andrew and others Versus Attorney General and others HCMC No. 106 of 2010***, Hon. Yorokamu Bamwine** observed that administration of justice requires that substance of disputes should be - 15 investigated on their merits and that errors and lapses should not necessarily debar a litigant from pursuit of his rights. I am also mindful that mistakes or omissions of counsel should not be visited on the litigant (see the cases of **Banco Arabe Espanol vs Bank of Uganda SCCA No. 8, Nicholas Roussos –vs Ghulam Hussein Habib Virani & Anor. SCCA 9 of 1993 and FL Kaderbhai** - 20 **& Anor versus Shamsherali & Ors. S. C Civil Application No. 20 of 2008**, **of 1998**. Hence this courts exercises its discretion to admit the affidavit in reply.

### Credibility / admissibility of the Respondent's affidavit in reply

Learned counsel for the Applicants discredited the Affidavit in reply on the 25 grounds that the deponent, Ms. Larya Catherine Victoria might be an impostor. She did not attach her National Identity Card and a copy of the resolution by the bank authorizing her to swear the affidavit on the Respondent's behalf. That she did not state in her affidavit in reply that she was an adult person of sound mind.

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5 It is my finding that an employee of a company in the position of Ms. Larya need not to attach special authorization before deposing to the facts in a case. This was observed in the case of *Equity Bank Ltd Versus John Buyiza HCMC No. 33 of 2018* which was cited with approval in the case of *Friecca Pharmacy Ltd Versus Anthony Natif HCMA No. 498 of 2019* wherein it was held that the law presumes 10 that certain employees have ostensible authority to act for the company. In the case of **TMA Architects & Another vs. Prome Consultants Limited** MC No. 80 of 2022, Justice Stephen Mubiru held that:

*"Companies can only perform acts through individuals and those individuals act on behalf of the company…. Ostensible authority was* 15 *explained in Hely-Hutchinson v. Brayhead Ltd [1968] 1 QB 549, thus; Ostensible or apparent authority is the authority of an agent as it appears to others. It often coincides with actual authority. Thus, when the board appoint one of their number to be managing director, they invest him not only with implied authority, but also with* 20 *ostensible authority to do all such things as fall within the usual scope of that office. Other people who see him acting as managing director are entitled to assume that he has the usual authority of a managing director."*

The Learned Judge further held that:

25 *"There is no evidence to show that Ms. Christina Muwanga had the express authority to sign the ICAMEK Variation Form on behalf of any of the applicants: but she had such authority implied from the nature of her office as director of both applicants. That office in itself carried with it authority to enter into these contracts without the sanction of* 30 *the board. That she had such authority may also be implied from the conduct of the parties and the circumstances of the case. She acted*

5 *as the de facto chief executive who made the final decision on any matter concerning the two applicants. Her signature on the ICAMEK Variation Form bound both applicants."*

In the present case, Ms. Larya Catherine Victoria deposed the affidavit in 10 reply as the acting head/company secretary of the Respondent. She was therefore capable of swearing the affidavit in reply as she did without special authorization. She had the ostensible and actual authority to depose the affidavit in reply.

Secondly, as to the failure to state the mental capacity of the deponent of the 15 affidavit in reply, the presumption is that every person is of sound mind until the contrary is proved. No evidence has been adduced by the Applicants to prove that Ms. Larya was not of sound mind when she deposed the Affidavit in Reply. In the circumstances, the court finds that the Affidavit in reply is not defective as alleged by the by the Applicants and this objection is overruled.

20 Having resolved all the preliminary objections and found that they do not dispose of this application, I now proceed to determine the application for stay of execution on its merits.

# **Issues for determination**

*Whether the Applicants satisfy the grounds for staying of execution of decree in* 25 *Civil Suit No. 0949 of 2022.*

For the court to exercise its discretion before the grant a stay of execution, it must be satisfied, as observed in the case of *Hon. Theodore Ssekikubo & Others Versus Attorney General, Constituitional Application No. 06 of 2013*, that: - 5 *a) That the applicant must establish that his/her appeal has likelihood of success or prima facie case of his/her right to appeal.* - *b) It must also be established that the applicant will suffer irreparable damage or the appeal will be rendered nugatory if a stay is not granted.* - *c) If 1 or 2 above has not been established, court must consider where the*

- 10 *balance of convenience lies.* - *d) That the applicant must establish that the application was instituted without delay.*

Further grounds have been established by the case of *Kyambogo University Versus Isiah Omolo Ndiege Civil Application No. 341 of 2013* that:

- 15 *e) That there is a serious and imminent threat of execution of the decree or order and that if the application is not granted the appeal will be rendered nugatory.* - *f) The Applicant is prepared to give security for due performance of the decree or order.* - 20 *g) That refusal to grant the stay would inflict greater hardship than it would avoid.* - (i) Applicant has lodged a notice of appeal

The Applicant has satisfied the requirement laid out **in Rule 76 (1), (2) and (3)**

25 **of the Judicature (Court of Appeal Rules) Directions**. The ruling in Miscellaneous Applications No. 1605 of 2022 and 1606 of 2022 was delivered electronically on the 17th May 2023. The Notice of Appeal was lodged with this Court on the 30th May 2023 within the stipulated timeline of fourteen days from the date the ruling was delivered. The same notice was served onto the

Respondent on the 30th 5 day of May 2023. This was within the 7 (seven) day period in accordance with Rule **78 (1) of the Judicature (Court of Appeal Rules) Directions.**

The 3rd Applicant deposed under paragraph three of her affidavit in support of this Application that the Applicants had filed with this Court a Notice of Appeal and lodged the same in the Court of Appeal. This was also confirmed by the 2 nd 10

Applicant under paragraph three of her affidavit in support.

Therefore, as per the Notice of Appeal attached and marked as Annexture B to the Affidavits in Support of this Application, court has established that a Notice of Appeal was lodged in this Court, Court of Appeal and served onto to the

15 Respondent.

## (ii) The appeal is not frivolous and has a likelihood of success

This court at this stage does not determine the merits of the Appeal but such Appeal must not be a sham, but rather of rational basis, founded on the facts and law, with the prospects or realistic chances of success.

- 20 In *Formular Feeds Ltd and Others Versus KCB Bank Ltd HCMA No. 1647 of 2023***, Hon. Justice Mubiru Stephen** observed that an appeal will be considered frivolous prima facie, where the grounds intended to be raised are without any reasonable basis in law or equity and cannot be supported by a good faith argument. - 25 In the case of **E. L. T Kiyimba Kaggwa -vs- Hajji Katende Abdu Nasser (1985) HCB 43** Odoki, J (as he then was) stated that:

*"a prima facie case or a strong prima facie case in the context of the exercise of discretion of any power to grant an interlocutory injunction leads to confusion as to the object of this form of temporary relief. The*

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5 *court no doubt must be satisfied that the claim is not frivolous or vexatious. In other words, that there is a serious question to be tried".*

There is no evidence in this Application, save for the Notice of Appeal, on what basis or grounds the Applicants are appealing the decision in Miscellaneous

- 10 Applications No. 1605 of 2022 and No. 1606 of 2022. There is no memorandum of appeal to enable this court establish the grounds of the said appeal and determine whether its frivolous or not. Neither do any of the Affidavits supporting this Application shade light on the content of the appeal nor are there any arguments that have been made for the same. From the evidence on - 15 record, it is constraining to form an opinion on the reasonableness of the intended appeal or its likelihood of success.

I therefore find that the Applicants have failed to prove this ground.

- (iii) The Applicant will suffer irreparable damage or the appeal will be rendered nugatory if a stay is not granted. - 20 Irreparable damage amounts to damage or injury that is substantial and cannot be adequately atoned for in damages.

According to **Hon. Justice Stephen Mubiru** in *Formular Feeds and others Ltd Versus KCB Bank Ltd* (supra), '*nugatory'* means of no force or effect, useless or invalid.

25 It is trite law that *prima facie* an injunction is not issued to restrain actionable wrongs for which damages are an adequate remedy. The onus of demonstrating that substantial loss or irreparable damage shall be suffered if the stay is not granted lies fairly and squarely on the Applicant.

5 The case of **Pan African Insurance Company (U) Ltd. – vs – International Air Transport Association HCT-00-CC-MA-086-2006** is very instructive on how to plead substantial loss. Lameck Mukasa, J stated:

"*The application merely states that if the decree is not stayed, the applicant will suffer substantial loss. The deponent should have gone a* 10 *step further to lay the basis upon which the court can make a finding that the applicant will suffer substantial loss as alleged. The applicant should go beyond the vague and generalized assertion of substantial loss in the event that a stay order is not granted".*

In the case of **Tanzania Cotton Marketing Board vs Cogecot Cotton Co. SA**

15 **(1995-1998) 1 EA 312** where Lubuva, J cited with approval the case of **Bansidhav vs Pribku Dayal AIR 41 1954,** it was found and 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* 20 *will really ensue. The words substantial loss cannot mean the ordinary loss to which every judgement debtor is necessarily subjected to when he loses his case and is deprived of property in the consequence. That is an element that must occur in every case…it is clear that the words substantial loss must mean something in addition to all different from* 25 *that".*

From the record, save for the 2nd and 3rd Applicants asserting in their respective affidavits supporting this Application that they have been advised by their lawyers that if this Application is not allowed, their Appeal will be rendered nugatory and that they shall suffer great injustice, there is no evidence

5 adduced by the Applicants of the irreparable damage that they will suffer or that their Appeal will be rendered nugatory.

In light of the above analysis I find that the Applicants have failed to show that they shall suffer substantial or irreparable loss which cannot be compensated for by damages should the stay be denied.

## 10 (iv) That the application was instituted without delay.

'Without delay' means that the Application was made within reasonable time or that there was no dilatory conduct by the Applicants. The Ruling in Miscellaneous Application No. 1605 of 2022 and 1606 of 2022 was delivered on 17th May 2023. This Application was filed on the 22nd June 2023; which is 15 about one month and five days from the date of the delivery of the Ruling and such period is within the reasonable time.

Court finds that this application was filed without delay.

*(v)* There is a serious and imminent threat of execution of the decree or order and that if the application is not granted the appeal will be 20 rendered nugatory.

The **Black's Law Dictionary 11th Edition at page 898** defines imminent as: "*a danger or calamity threatening to occur immediately; dangerously impending or about to take place".*

In *Formular Feeds Ltd Versus KCB Bank Ltd (supra),* it was observed that steps 25 to 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.

5 There is no evidence on record to show that the execution of orders or decree in Misc. No. 1605 of 2022 and No. 1606 of 2022 has been initiated or commenced.

In the case of *Osman Kassam Ramathan Versus Century Bottling Company Ltd SCCA No. 035 of 2019*, the Supreme Court observed that execution, in its widest sense signifies the enforcement of or the giving effect to the judgments or orders 10 of courts of justice.

In *Lucy Mary Orech Versus Kabogoza Mutwalib CACA No. 200 of 2020,* **Justice Cheborion Barishaki JJA** dismissed the Application for interim stay of execution on the basis that no evidence existed that the respondent had extracted a decree or done any act to execute the decree or applied for a warrant of execution nor 15 served a notice to show cause why execution not issue.

Further, **Hon. Justice Buteera. R, DCJ** while dismissing the application for stay of execution, observed in *Uganda Revenue Authority Versus East Africa Property Holding Ltd CACA No. 144 of 2014,* that the letters from the respondent requesting for payment of the decreed sum by the High Court were 20 not a threat of execution of a Court Order.

The Court record does not have an extracted decree of the Ruling in Misc. Applications No. 1605 of 2022 and No. 1606 of 2022, but there is an unsigned and undated document headed 'PARTIAL DECREE' uploaded on 19th May 2023. This cannot be an extracted decree or authentic court document.

The 2nd 25 Applicant states that they face imminent danger of warrant of arrest and detention in civil prison at Luzira if this Application is not allowed and the 3 rd Applicant avers that the Respondent has instituted criminal charges against the 3rd Applicant at Buganda Road Court as per *Annexture C2* to her affidavit in support of this Application.

5 In the instant case, there is no evidence that the Respondent has initiated any of the stages of execution of a Court Decree as observed above. The attached charge sheets for criminal charges under Annexture 'C2' are separate of the orders in Misc. Applications No. 1605 of 2022 and No. 1606 of 2022. Court therefore finds there does not exist a serious or imminent threat of 10 execution of the Decree or orders of the court.

## (vi) The applicant is prepared to give security for due performance of the decree or order.

The Respondent prayed that if this court is to allow this application, the Applicants be ordered to deposit 100% of the decretal sum as security for due

15 performance of the decree. The Applicants in reply stated that they need not provide security since the Respondent holds the 3rd Applicant's certificates of title as security for the loan under litigation in HCCS No. 949 of 2022.

An order for security for due performance of the order by its nature operates to protect the Respondent from defending a frivolous appeal. The

20 Appellant/Applicant, in such circumstances is meant to deposit the disputed sum. The Applicants have stated that the Respondent possesses the 3rd Applicant's certificates of title, as securities to the disputed sum. This is not disputed by the Respondent.

I find that the Applicants need not give security for due performance of the 25 partial decree.

> (vii) The refusal to grant the stay would inflict greater hardship than it would avoid.

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5 I will resolve this with the last ground i.e. that court must consider where the balance of convenience lies in the event that the applicant fails to satisfy court that the appeal has a likelihood of success and that the applicant shall suffer irreparable damage if the application is not granted.

In considering these grounds, the court strikes a balance between the interests 10 of the Applicants, that is ensuring that their appeal is not rendered nugatory and the interests of the Respondent of enjoying his/her fruits of the judgment/decree.

Having established that the Applicants have not satisfied this court that the appeal has a likelihood of success and that they shall suffer irreparable loss, the

- 15 balance of convenience lies in dismissing this application. In any event, the Ugx. 5,038,066,702/-, that the Applicants were ordered to pay was an amount they admitted and did not dispute. Regarding the disputed amount, the Applicants were granted leave to file a defence in respect of the same. This was the gist of the court's decision in Miscellaneous Applications No. 1605 of 2022 and No. - 20 1606 of 2022.

This Application is dismissed with costs to the Respondent.

**Signed and dated at Kampala this 12th day of August 2024.**

**Harriet Grace MAGALA**

25 **Judge**

**Delivered online (ECCMIS) this 13th day of August 2024.**