White Nile Consultants Ltd and Another v DFCU Bank (Civil Application No. 19 of 2023) [2023] UGCA 403 (13 February 2023)

# - Stay of proceedings THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA **CIVIL APPLICATION NO. 19 OF 2023** $\mathsf{S}$ [ARISING FROM CIVIL APPLICATION NO. 20 OF 2023] **[ARISING FROM MISC. APPLICATION NO. 1842 OF 2022 AND** $10$ **HCCS NO. 93 OF 20211** WHITE NILE CONSULTANTS LTD 1. $\mathbf{I}$ <table> PATRICK BITATURE APPLICANTS $2.$ 15 **VERSUS**

<table>

DFCU BANK....................................

### **BEFORE : CHRISTOPHER GASHIRABAKE**

#### [SINGLE JUSTICE]

# **RULING OF COURT**

$25$

This application was brought by Notice of Motion under the provisions of Sections 76 and 98 of the Civil Procedure Act, Rules 2(2),6(2)(b),42(1),44 and 50 Judicature (Court of Appeal Rules) Directions S. I 13 -10 seeking for orders that;

$(1)$ An interim order of stay issues;

(2) staying the proceedings of the High Court in Civil Suit No.093 of 2021 pending the hearing and determination by this court of the Applicants' substantive Application for stay of proceedings against the ruling and orders of the High Court in Civil Suit No.093 of 2021 and

$(3)$ that costs of the application be provided for. 35

The Notice of Motion was supported by an affidavit in support and further affidavit in support both deponed by Mr. Patrick Bitature, the 2<sup>nd</sup> Applicant, who is also a director of the $1^{st}$ Applicant.

The Application was opposed by the Respondent through an Affidavit in Reply sworn by Yvonne Bahikire a legal officer with the Respondent's bank.

### **Background.**

The background to the application that is discernible from the Notice of Motion and the affidavits in support is that the Applicants are challenging the decision of I{on. Justice Stephen Mubiru ovemrling the Applicants' preliminary objection challenging the proceedings in light of a subsisting dismissal order against the Respondent.

While hearing the main suit, the Applicants raised an objection contending that the subject matter of the proceedings in HCCS No. 093 of 2021 had been ruled upon in HCCS No.07 of 2017.

o

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At the hearing of the above suit, the Applicants raised a preliminary objection challenging the proceedings in light of a subsisting dismissal order against the Respondent.

That the trial judge however made a ruling directing that the Applicants' preliminary objection be raised as an issue during hearing of the main suit. 15

Being dissatisfied with the ruling of the High Court, the Applicants filed Miscellaneous Application No.1842 of 2022 seeking leave to appeal against the ruling and the same is yet to be heard and determined by the High Court.

Briefly the grounds were;

The grounds in support of the Application are contained in the Notice of Motion and they are elucidated in the affidavit in support. The gist of the grounds is that the Applicants have filed in this court an application seeking leave to appeal against the orders of the trial, that they have filed in this court a substantive application for stay of proceedings in the main suit. 25

Pending determination of the said applications, the Applicants aver that they filed the instant application for an interim order of stay of proceedings in order to safeguard their right to appeal and for stay of proceedings. 30

# Grounds in Opposition by the Respondent

o

The application is strongly opposed by the Respondent. The gist of the Respondent's opposition as set out in the affidavit in reply deponed by the Yvonne Bahikire is that the Applicants' application for leave to appeal was filed out of time.

The Respondent further averred that the Applicants' application for leave has no legal basis. The Respondent prayed that the application be dismissed with costs. 40

### Itcprcsentation

At the hearing of the application, the Applicants were represented by Mr. Mathew Kiwunda and Mr. Arnold Kiwalabye. The Respondent was represented by Mr. Brian Kajubi holding brief for Mr. Isaac Walukaaga. There were no representation from the parties.

#### **Submissions**

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It was submitted by Counsel for the Applicants that; in an application for an interim order of stay of proceedings in the Court of Appeal, this court derives its $10$ jurisdiction from Rule 6(2) (b) and Rule 2(2) Judicature Court of Appeal **Rules) Directions.**

In support of the submissions, Counsel cited the decision of this court in Kampala Financial Services Ltd & Anor Vs Hussein Muhammad Civil Application No.146 of 2021.

The Applicants' counsel further submitted that the applicants have satisfied the conditions precedent for the grant of an interim order of stay of proceedings to wit:

A) that they have duly filed a competent notice of appeal under the circumstances enumerated in the further affidavit in support,

B) they have filed an application for leave to appeal and

C) a substantive application for stay of proceedings, both of which are pending before this honourable court.

Counsel contended that, in the meantime, there is a serious and imminent threat of execution by virtue of the fact that the Respondent and trial court are taking steps towards hearing of the main suit, out of which these matters have arisen.

Counsel invited court to consider the averments in the affidavits in support of the application and find that a case has been made out for the grant of an interim 30 order of stay of proceedings.

The Respondent did not file submissions and I will proceed to rely on the pleadings as filed by the parties.

#### **Analysis** 35

I have carefully read the pleadings and affidavit evidence filed by the parties. I have also read the submissions of the Applicants and a number of authorities to support the legal arguments.


There is no doubt that the common thread in the said decision is the fact that the law and the principles governing the grant or otherwise of an interim order of stay of execution or stay of proceedings are well settled, as is hereinafter demonstrated.

It is now trite law that this court has inherent power to make such orders as may $\mathsf{S}$ be necessary for achieving the end of justice or to prevent abuse of the process of court.

The jurisdiction and discretionary power of this Court are derived from **Rule 2** (2) of the Judicature (Court of Appeal Rules) Directions. Rule 2(2) provides:

'Nothing in these Rules shall be taken to limit or otherwise affect the inherent 10 power of the court, and the Court of Appeal, to make such orders as may be necessary for achieving the ends of justice or to prevent abuse of the process of and such court, and that power shall extend to setting aside judgments which have been proved null and void after they have been passed, and shall be exercised to prevent an abuse of the process of any court caused by delay. 15

Further, it has been severally held by this court that the court may, in exercise of its discretion, grant an interim stay of proceedings whenever it considers it equitable to do so.

This discretionary power is derived from Rules $6(2)$ (b) of the Judicature (Court of Appeal Rules) Directions, which provides that; $20$

'In any civil proceedings, where a Notice of Appeal has been lodged in accordance with Rule 76 of these Rules, order a stay of execution, an injunction, or a stay of proceedings on such terms as the court may think just".

- The rationale for the grant of an interim order of stay of execution or stay of $25$ proceedings under Rule $2(2)$ and $6(2)$ (b) of the Rules of this court is to achieve the ends of justice by preserving the status quo so that the main application for stay of execution or stay of proceedings is not rendered nugatory. - In an application for an interim order of stay of proceedings or even interim 30 order of stay of execution, it is not necessary to pre-empt consideration of matters necessary in deciding whether or not to grant the substantive application for stay.

I am fortified by the Supreme court decision in SC Civil Application No. No.19 of 2008; Huang Sung Industries Limited v Tadjin Hussein & Others

The position of the law is that, in order to succeed in an application for an interim order of stay of proceedings or even stay of execution, it suffices for the applicants to show that; a substantive application for stay of proceedings is pending and that there is a serious threat of execution before the hearing of the substantive application.

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The first condition is proof that a Notice of Appeal has been filed in accordance with Rule 76 of the Rules of this Court. I note that the Applicants filed a Notice of Appeal on the 24<sup>th</sup> January 2023. This is shown in Paragraph 2 of the Applicants' further affidavit.

I now turn to the second pre-condition. It is a legal requirement that the $10$ Applicants must prove that they have filed in this Court a subsisting substantive application for stay of proceedings. Paragraph 12 of the Affidavit in support sworn by the $2^{nd}$ Applicant shows that they have filed a substantive Application for stay of proceedings vide Civil Application No.020 of 2023 which application is pending before this honourable court. I therefore find that the second 15 requirement has equally been satisfied.

The last consideration is the question of whether there is a serious threat of execution before hearing of the substantive application. I have considered the affidavit evidence of the applicants and the averments in the affidavit in reply. I have also perused the proceedings of the High Court in the above suit. I note 20 that, prima facie; the said orders have an impact on the manner in which the main suit will proceed. These are the very orders that the applicant seeks to challenge on appeal, if granted leave by this Court.

In view of the foregoing, I find that the Interim Order sought by the applicants is necessary to preserve the status quo until the substantive application for stay of 25 proceedings is heard and determined. In the circumstances of the instant application, I do find merit for the grant of an interim order of stay of all proceedings in High Court in Civil Suit No. 093 of 2023 pending the hearing and determination by this Court of the Applicants' substantive application for stay of proceedings.

I do hereby grant the interim order as prayed for. The net effect is that the application is allowed

Dated at Kampala this $-43$ day of $\cancel{e6}$ 2023

CHRISTOPHER GASHIRABAKE

JUSTICE OF APPEAL