All Ports Freight Service v Kamanyi and Sembuya (Civil Suit 409 / 95) [1997] UGHC 24 (20 February 1997)

Annexture C

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THE REPUBLIC OF UG:

IN THE HIGH COURT OF UGANDA AT KAMPALA

CIVIL SUIT 409/95

ALL PORTS FREIGHT SERVICE::::::::::::::::::::::::PLAINTIFFS

VFRSUS

JULIUS KAMANYI FRANCIS SEMBUYA::::::::::::::::::::::::::::::::::::

BEFORE HONOURABLE MR. JUSTICE A. KANIA

RULING

This is an application by Nation of Motion and supported by the affidavit of Francis Sembuya. It is brought under the provisions of Section 101 of the Civil Procedure Act and all other enabling provisions of the law and by it the applicant/judgment debtor seeks for an order staying the execution of the decree of this Court. The application is founded on three broad grounds namely:-

- $1.$ That substantial loss may be occasioned to the applicant if the order is not made. - $2.$ That this application has been made without undue delay. - $3.$ That security has been given by the applicant for the due performance of such order as may ultimately be binding upon him.

The application is opposed by the affidavit of Francis Wazarwahi Bwengye in reply to which the applicanted another affidavit in rejoinder.

Mr. Byenkya learned Counsel for the applicant submitted that the applicant has satisfied the conditions for grant of the order of stay of execution of a minute as set out in Order 39 Rule 4 of the Court Procedure Rules. He contended that the applicant would incur substantial loss if the execution of the decree was not stayed. He was of the view that substantial loss did not mean irreparable loss, as it can mean potential loss. He submitted the total award in the decree could go well over Shs.250 million and if this colossal amount were to be paid before the appeal; it would amount to substantial loss in the event the appeal is successful and the respondent is not in a position to pay the said sum back. Mr. Byenkya also submitted that the application was brought without delay and that the Irrlicant had furnished security in the form of an unencumbered certificate of title valued at Shs.75,000,000=. He contended that the security did not need to equal the amount of money on the decree. Learned Counsel was of the view that the Security only need be valuable but not adequate and he submitted that since there were two defendants/judgment debtors, the security proposed was a fair contribution on the part of the applicant. Mr. Byenkya finally argued that if the stay was not granted, in the event the appeal succeeded, it would be rendered nugatory.

Mr. Tibesiqwa, learned Counsel for the respondent submitted that the application is without merit as stay of execution can only be ordered upon sufficient cause having been shown, or when special circumstances have been shown to exist. He pointed out that on the authority of the Somali Democratic Republic Versus Anoop Sunderali Treon SCCA 11.88 and Lawrence Musilwa Kyazze Versus Eunice Busingye SCCA 18/90 the conditions laid in 039 Rule 4 [3] must be strictly complied with before an order for stay of erocution can be granted.

Mr. Tibesigwa submitted that a loss is substantial in terms of Order 22 Rule 4 [3] when it amounts to more than the loss that will result from the satisfaction of the payment of money in satisfaction of a decree can not amount to substantial loss because it can always be refunded upon the appeal succeeding. Counsel argued that a bore statement that substantial loss would arise like in paragraph 3 of Francis Sembuya's affidavit sufficient. He conceded the application had been made without delay but opposed the security as in sufficient. He submitted that under the decree each of the defendants was liable to pay the decretal sum and that the security ought to be in money not in land which could lead to further litigation. Mr. Tibesigwa finally submitted that since the applicant had not demonstrated that his appeal had a chance of success, he cannot claim that his appeal will be rendered nugatory. He invited me to dismiss the application.

It is now settled law that the High $C_{01}$ $\rightarrow$ s powers to stay its own orders and decrees and that this jurisdiction is derived from Section 101 of the Civil Procedure Act in the Court's exercise of its inherent powers. This position was stated in Joanita Kaqqwa Versus Olive Amelia Kawalya Kaqqwa [Administration Cause No 21/1972] 1972 ULA 12 und re-emphasised in CA No.13/1984 Mugenyi & Co Advocates Versus National Insurance Corporation and SCCA 18/90 Lawrence Musitwa Kyazze versus Eunice Busingye. In granting a stay of execution, the Court is guided by the provisions of Order 39 Rule 4 [3]. It must be satisfied before granting such an order that:-

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- $[1]$ that substantial loss may result to the applicant unless an order of stay is made; - $[2]$ that the application has bec. ....de without delay and; - security has $[3]$ that been given by the applicant for the due performance of such

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decree or order as may ultimately be binding upon him.

See Jorepi owoko versus Edward MuqaTu 119761 flcB 332.

O

I

The rationale of an order of stay of e d3cree or order is to balance the j-nterests of both the applicant and the judgnent credj-tor, It seeks to ensure that the ultimate successful party in the appeal does not have his success nugatory. It also protects the judgmer,L \*----eJ! in the event the appeal fails by imposing stringent conditions restricting the circumstances under which such stay may be ordered. These are the conditions contained in Order 39 RuIe 4 I31.

Mr, Byenkya, learned Counsel argued that the decretal sum in this case is colossal and that if the decree is executed since thd antecedents of the judgment debtor are not known, the applicant may not be abfe to recover it in the event he succeeob un appeal. This in his view creates the potent.iality of substantial loss. Mr. Tibesigwa countered by arguing t}.\*- ,:yment of a moneyed decree can not be said to constitute sr.bstantial loss as the money paid can always be refunded. He also pointed out that it isi the practice that money decrees are not stayed. I agree with Mr. Tubesigwa that money paid in execution of a decree can alt^tays be refunded and that rL rD Ene practice that decrees expressed in money terms are by practice not stayed. See MisceTTaneous AppLication No 664/96 Teddv Ssezi cheeye. Uaanda confidential Versus Enos Tumusiime.

However, I am of the view that each case must be considered on its merits. The aggregate sum on the instant decree is in thA region of Shs.250,000,000= taking the substantive awards plus interest thereon. I don't subscribe to the view that the background of the judgment c.reditor is obscure but should the decree be executed and sum realiseci .,- lost in a business venture, the applicant would be hard put getting a refund in the event he succeeds on appeal. In Joseph owoko Versus Edward tluqalu [SuDral stay was ordered on grounds interalia that the

I don't agree that to establish decretal sum was large. substantial loss such loss has to be in excess of the decree. Taking into account the peculiar circumstances of this case, I am of the view that the applicant has shown that if the decree is not stayed, there is the possibility of substantial loss to him in the event his appeal succeeds.

As it was conceded that this application was preferred without delay, I don't propose to discuss this matter of the necessity to bring the application without undue delay.

The applicant furnished security in the form of an uncumbered leasehold comprised in Plot No. 405 Kyadondo Block 273 Mengo with which puts valuation report its market value $\overline{a}$ at Shs. $75,000,000=$ . Mr. Byenkya contended that this is a fair contribution by the applicant to the satisfaction of the decree considering that there is another judgment debtor. Alternatively he argued that Order 39 Rule 4 [3] does not require the security to be adequate but that it is sufficient if it is of value. Mr. Tibesigwa contested the security as insufficient and argued that in a money decree land should not be accepted as security as it might be the subject of further litigation. Order 39 Rule 4 [3] [c] provides that no order of stay shall be made unless the Court is satisfied that:-

$[a]$

$[d]$

Security has been given by the applicant for $[c]$ the due performance of such decree or order as may ultimately be binding upon him.

My understanding of this provision is that the applicant is required to furnish a security equal to that he would be required to pay or part with in the event he lost the appeal and still had to satisfy the decree. The interpretation offered by Mr. Byenkya that the security need not be adequate provided that it is valuable would defeat the purpose and rationale of an Order to

p.rotect the interests of the judgment creditor in the event the appeal faifed. I am of the vie\,, that in balancing the interests of the parties the applicant is required to furnish a security equivalent to the decree which he would eventually have to perform should it turn out that his appeal fails to succeed.

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Mr. Tibesigwa argued that in money decrees in ordering stay land is not proper security to be offered. I have neither come across an authority in support of this argument nor did Mr. Tibesigv/a refer me to any authority on the subject. The efficacy of ^a seeurity is determined according to order 39 Rule 4 [3] by whether j.t can be used for the due performance of the decree sought to be stayed. As 1and, in this case an unencumbered land, can be sofd, it is capable of l::ng used for the due performance of the decree.

Mr. Byenkya finally contended that the applicant had furnishe\$ a fair share of the decree since a second judgment debtor was equally 1iab1e on the decree. The decree was passerl aoainst the defend^nt-s in the lead sui.t jointly and severally. The effect of this is that the judgmenl' creditor ic at liberty to recover or realise the full decretal sum from either of the defendants/ judgment debtors. This Court can not choose for the judgment creditdr against which of the judgment debtors to proceed. As the applicant is liable under the terms of the decree to satisfy the whole decree and ha" offered to furnish security for its performance, he must compfy in fuII to the provisions of Order 39 Rule 4 t3l tcl if this Court has to give an order for the stay of execution of the decree.

Considering the circumstances of this case as a whoJ,e, invoking the inherent po\^rers under Section 101 of the Civil Procedure Act I order that the execution of the decree passed in HCCS No.409,/95 be stayed on the following conditions:-

That the title oeed property comp:lsed in ¹ of ^P1ot !t\_ - +05 1ea s eho ld Kyadondo

Block 273 Mengo currently valued at Shs.75,000,000= be deposited in Court as security for the due performance of the decree in Court.

- $2.$ That the applicant furnishes an additional security of Shs.87,000,000= within $[14]$ days from the date hereof in cash or by bank draft and that the same be deposited in Court. - 3. If the condition stated two are not fulfilled the order of stay shall lapse after 14 days. - The costs of this application shall abide $\overline{4}$ the outcome of the appeal.

Augustus / Kania JUDCE. $20/02/97$ .