Court name
Commercial Court of Uganda
Case number
Miscellaneous Application 421 of 2010
Judgment date
2 February 2011

Larb (U) Ltd & 2 Ors. v Green Land Bank ( In Liquidation) & Anor (Misc. Appl. No 421 Of 2010) (Miscellaneous Application 421 of 2010) [2011] UGCommC 7 (02 February 2011);

Cite this case
[2011] UGCommC 7

THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA HOLDEN

AT KAMPALA
COMMERCIAL DIVISION
MISCELLANEOUS APPLICATION NUMBER 421 OF 2010
ARISING F
ROM HIGH COURT CIVIL SUIT No. 253 OF 2010

    

 

LARB (U) LTD }
2.       AZALIA LUBEGA}
3.       ROSE LUBEGA}...................................................                                                               APPLICANTS/PLAINTIFFS

 

VERSUS
   

 

 

GREENLAND BANK (IN LIQUIDATION)
2.       SIL INVESTMENTS LTD}.............................                                                                     RESPONDENTS/DEFENDANTS

 

 

 

 

BEFORE HONOURABLE MR JUSTICE CHRISTOPHER MADRAMA
RULING

The Applicants brought this application under order 41 rules 1, 2 and 9 of the Civil Procedure Rules, section 98 Civil Procedure Act as well as section 33 of the Judicature Act cap 13 laws of Uganda, for orders that a temporary injunction issues restraining the Respondents/Defendant's, their agents/servants, from demanding and/or recovering shillings 373,305,924/=plus costs of shillings 30,000,000/= and/or appointing a receiver for receiving, managing and/or selling by private treaty, public auction or otherwise disposing of the Applicants/Plaintiffs business/property, evicting, intimidating threatening and/or in any other way interfering with the Applicant/Plaintiff's quiet enjoyment, possession of their properties until the disposal of High Court Civil Suit No. 253 of 2010 a suit for a permanent injunction. The applicants also seek for costs of the application. The application is supported by the affidavit of one Azalia Lubega, a supplementary affidavit by the same person and affidavits in rejoinder by Azalia Lubega and Rose Lubega. The grounds of the application are namely that:
1.      
On the 25th of March 2010 the second Defendant wrote a letter to the plaintiffs demanding from the plaintiffs the sum of Uganda shillings 373,305,924/= under execution in High Court Civil Suit No. 478 of 1996 between Greenland bank Ltd and the Applicants.
2.      
That in the previous suit the applicants were ordered to pay Uganda shillings 80,089,250/=

 

3.      

 

Pursuant to the court order and execution was conducted by Victoria General Auctioneers Court Bailiffs on the 5th of February 1997 whereby they sold properties of the plaintiffs comprised in LRV 1483 folio 216 plot 6 at Iganga and LRV 1597 Folio 20 in Jinja to recover the said amount.

 

4.      

 

Consequently, the Applicants filed a suit in the Commercial Court seeking for several remedies namely;

 

a.      

 

That the intended execution by the first and second Defendants is illegal as it is to be conducted under a null and void transaction because execution had already been levied against the property of the plaintiffs on the 5th of February 1997 to recover 80,089,250 Uganda shillings
b.      
A declaration that the appointment of the second Defendant as debt collector against the plaintiff is wrongful/illegal, null and void since its basis is an already executed decree.

 

c.      

 

That the charging of interest on the plaintiffs account formerly run at Greenland Bank Ltd is illegal as the Bank is no longer in operation and the first and second Defendants are not in law authorised to charge interest after the liquidation and seizure of Greenland bank Ltd and any accounts showing accruing interest be declared null and void and any interest illegally charged against the plaintiffs by the defendants be refunded. The plaintiffs also seek a refund of Uganda shillings 5 million to be paid as special damages.

 

d.      

 

The first and second Defendants pay for special, general and aggravated damages for trying to execute under an already executed decree and that costs of the suit be provided

 

5.      

 

That if the actions of the Respondents/Defendant's are not halted they will continually cause loss and damage to the Applicants/Plaintiffs.
6.      
That the Applicants/Plaintiffs are likely to suffer irreparable loss and damage if an interim order is not issued

 

7.      

 

That the balance of convenience will be best served by this court issuing an interim order against the Respondent/Defendant's

 

8.      

 

That if the temporary injunction order is not issued, the proceedings in the main suit in the court will be rendered nugatory

 

9.      

 

That it is in the interest of justice that the temporary injunction order is issued pending determination of the main suit.
The application is mainly supported by the affidavit of Azalia-Lubega the Managing Director of the first Applicant Company which narrates the facts in support of the grounds in the chamber summons.
The second Respondent through Ms Nanyonga Evenly swore an affidavit in reply dated 23rd of September 2010 in which she avers inter alia and I quote:

1.      
That I have been advised by my lawyers whose information I believe to be true that the Applicant’s lawyers… Should be disqualified from handling this matter on behalf of the Applicant because they had earlier on represented the Respondent in an earlier suit between the same parties, arising from similar facts as this which is prejudicial.
2.       That it is not true as alleged by the applicants in their application that the respondents are on the verge of appointing a receiver to sell or auction or dispose of the applicants property or evicting or intimidating or threatening the applicants.
3.       That I am advised by my lawyers that the process of attachment, sale or otherwise in execution process is done by court bailiffs who are officers of court and can only do so under the instruction and supervision of court which we are not and have not instructed any to pursue the process on our behalf.
4.       That we are not trying to recover under an already executed and satisfied decree but we are lawfully demanding the balance of the principal sum and interest thereon that remain unsatisfied after the execution process only realised Uganda shillings 20,000,000/= instead of Uganda shillings 80,089,254/= plus interest which was ordered by court in High Court civil suit No. 478 of 1996.
5.      
That the applicants are aware of their debt obligation that is why they have recently paid Uganda shillings 5 million to the respondents without coercion or intimidation and further asked for a statement of account showing the outstanding balance in order that they could settle this matter amicably.…
6.       That I am also advised by my lawyers that the appointment of the first and second respondents as liquidator is not null and void and that it does not contravene any law.
7.       The applicant would not suffer any irreparable loss or damage that cannot be atoned.
8.       That justice would best be served if the applicants pay what is due and owing to the respondents as they are well aware that the execution did not realise the full decreed sum."
The Respondent attached a letter from the plaintiffs namely Messrs Mukwatanise and company advocates dated first of July 2010 which letter reads as follows:
"We make a reference to the above and in particular your letter of 29th June 2010 regarding the claim of Messrs Sil investments Ltd for shillings 372,305,924/=.
Your client demanded from our client above named on 5 March 2010. A reply to yours of 29th of April 2010 copy of which is attached for ease of reference has never been attended to.
Our clients were convinced by one Evelyn Nanyonga of Sil investments Ltd that a deposit be made towards the principal sum which our client believes is far less than the principal as at the time of the decree having lost two properties at your client’s initiative and hand. This was under High Court civil suit No. 478 of 1996 but the court file is still misplaced.
Our clients paid shillings 5 million awaiting the accountability demanded vide our letter of 29th of April 2010.
It has surprised our clients that the matter which was expected to be amicably resolved has turned out in the language of your letter.
It is our client’s view that our letter be replied to and you confirm the proceeds of sale of the two properties so that a negotiated settlement can be reached..."
After this Azalia Lubega swore an affidavit in rejoinder stating that Messrs Greenland Bank no longer existed and that execution in High Court civil suit number 478 of 1996 was completed. That Greenland bank in liquidation and Sil investments no longer operate as a bank so the parties are different and the question of conflict of interest cannot arise. That Greenland Bank in liquidation was an entity of Bank of Uganda a totally different party to the previous suit and that Sil Investments Ltd is purporting to act as an official receiver of the Central Bank; Bank of Uganda and Messrs Semuyaba, Iga and Company advocates have never acted for any of them.
I shall first deal with the question of whether counsel Semuyaba should have audience in this matter before I go to the rest of the application.
I have perused the pleadings of the parties in the main suit and attachments thereon. The plaint in the previous suit namely High Court Civil Suit No. 478 of 1995 was filed by Messrs Birungi, Semuyaba and Company Advocates for Messrs Greenland Bank against the current applicants to recover the sum of 77,369,060/= owed to Greenland Bank. Annexure “B” to the plaint is a letter dated 4th of June 1996 wherein the above firm applied for judgment. A perusal of the signature of the letter applying for judgment shows that it was signed by the same person who signed the plaint in High Court Civil Suit No. 253 of 2010 and the reply to the written statement of defence thereto. The warrant of attachment annexure “D” to the WSD in HCCS NO. 478 of 1996 is issued upon the application of Messrs Birungi, Semuyaba, Iga and Co. Advocates. The written Statement of Defence is attached to the supplementary affidavit in support of chamber summons of Azalia Lubega sworn to on the 10th of December 2010. The chamber summons in the current application is signed by the same person who signed the application for judgment in the former suit namely High Court Civil Suit No. 478 of 1996 in his letter dated 4th June 1996. Last but not least the written submissions in this application and the rejoinder to the reply thereof are signed by the same person who applied for judgment on behalf of Greenland Bank in the previous suit.
It is not in doubt that the claim of over Uganda Shillings 373,000,000/= against the applicants and which is being contested in the main suit and for which an injunction is sought in this application arose from the proceedings and transaction in High Court Civil Suit No. 487 of 1996. (I have noted that the plaint describes the former suit as HCCS 478 of 1995 while later correspondence on the same matter describe the previous suit as HCCS 487 of 1996. I have concluded that there is an error in one of the references but they refer to the same suit.) It is my finding on a question of fact and based on the affidavit of Evelyn Nanyonga that the claim in question arose from the previous suit handled by the person who signed the pleadings in the current and pending suit of 2010. Paragraphs 6 and 7 of the affidavit unequivocally avers that the amount of money claimed was a balance arising from an execution in High Court Civil Suit No. 478 of 1996. In other words the property of the applicants did not satisfy the decreed amount.
What is troubling and which this court cannot resolve on a point of fact is what the wording of the decree is. The pleadings show that the file of the previous suit is misplaced. Was for instance interest awarded in the decree and if so how much? I will come to this point later on. The contents of the decree can be obtained from the warrant of attachment which presumably reflects the same. The amount in the in the warrant of attachment comprise of two items for execution namely decree for 77,369,060/= and bill of costs of 2,720,190/=. There is no mention of interest in the schedule. The above amounts are the 80,089,250/= for which two properties were attached in the warrant. Namely LRV folio 16 6 Ngobi Close Iganga and LRV 1597 folio 20 1 Baxi Close Jinja. The amount of money realised from the sale of one of these properties is a sum of shillings 20,000,000/= and seems to be admitted as an offset to the total amount in the previous suit of 1996. What is material for consideration is that the current proceedings in this court are founded on money owed to Messrs Greenland Bank by the Applicants ordered by court in the previous suit.
The question therefore is whether Counsel Justin Semuyaba is the counsel who prepared the pleadings in the main suit in High Court Civil suit 478 of 1996 (or 5)? It is apparent that he has participated in those proceedings and presumably wrote the written submissions.
The Advocates (Professional Conduct) Regulations, rule 4 thereof provides as follows:
“4. An advocate shall not accept instructions from any person in respect of a contentious or none contentious matter if the matter involves the former client and the advocates as a result of acting for the former client is aware of any facts which may be prejudicial to the client in that matter.”
Secondly, I would like to quote from a related regulation 7 of the Advocates (Professional Conduct) Regulations which protects information of clients from disclosure by their counsel. It reads as follows:
“7. None disclosure of clients information
An advocate shall not disclose or divulge any information obtained or acquired as a result of his or her acting on behalf of a client except where this becomes necessary in the conduct of the affairs of that client, or is otherwise and required by law.
The question to be determined in terms of regulation 4 is whether Greenland Bank is a former client of the Applicants counsel. Secondly, whether the matter in which the Applicants counsel is appearing has matters in the knowledge of the Applicants Counsel which may be prejudicial to the Respondent’s case.
It not in dispute that Greenland bank was represented by Birungi, Semuyaba Iga and Company Advocates in high court civil suit number 478 of 1996.
The respondents counsel on the other hand submitted firstly that the applicants lawyers Mr Justin Semuyaba should be disqualified from handling this matter on behalf of the applicant because he had earlier represented the respondent in an earlier suit namely High Court civil suit number 478 of 1996 between the same parties, arising from similar facts as the current facts and which is prejudicial to the respondent and contrary to the Advocates (Professional Conduct) Regulations. The answer of the Applicants Counsel is that Messrs Birungi, Semuyaba, Iga and Co. Advocates is no longer existent as one of the Partners Mr. Birungi Wycliffe who used to have personal conduct of the HCCS 478 of 1996 left and the firm formed Messrs Semuyaba, Iga and Co. Advocates. That Semuyaba Justin did not represent Greenland Bank at all. Secondly that the facts of the two cases are dissimilar and the Respondents are two different parties. IN the alternative, counsel submitted that under the Advocates (Amendment) Act 2002 S. 14 A where an advocate is denied audience by a tribunal this does not prejudicially affect the clients since his action prior to disqualification are saved by the law.
The law is has been interpreted in the East African case of King Woolen Mills Ltd and another v Kaplan and Straton Advocates [1990–1994] 1 EA 244 (CAK) The appellants negotiated a loan from the Standard Merchant Bank Limited (The London Bank), through a guarantee offered by the East Africa Acceptances Limited (The Acceptances). The appellant then requested the respondent to act for them in clearing the loan and in drafting the various security documentation. The respondents agreed to so act for the appellants but also informed the appellant that they would also be acting on behalf of The London Bank in relation to the loan agreement and on behalf of The Acceptances in connection with the preparation of an asset debenture and legal charge over the appellant’s property. The appellants did not express any objection to the respondent acting for the other two parties.
Subsequently, the respondent wrote a letter to the appellant accepting to act for them but also stating that it would reserve the right to continue acting for the London Bank and The Acceptances, as its principal clients, in case of any conflict between them and the appellant.
The respondent thus acted as advocates for the appellant on one hand, and for The London Bank and the acceptances on the other hand from 1981 to 1982. A dispute later arose between the appellants and The Acceptances in 1989 and the appellants filed suit against them and their receivers in a different matter. The appellants then also filed this suit seeking a declaration from the Court that the respondents cannot represent The Acceptances, The London Bank and the receivers in the former suit and an injunction restraining the respondent from breaching the terms of the client/advocate relationship established by their retainer.
The Court of Appeal held at pages 251 – 252:
The fiduciary relationship created by the retainer between client and advocate demands that the knowledge acquired by the advocate while acting for the client be treated as confidential and should not be disclosed to anyone else without that client’s consent. That fiduciary relationship exists even after conclusion of the matter for which the retainer was created. This principle applies equally where an advocate acts for two or more clients in the same transaction or subject matter because the retainer is specific between the individual client and the common advocate. There exists no fiduciary relationship between the two or more clients of the common advocate. Any knowledge received from each client and their common advocate, although the common advocate acting for two or more clients will be able to complete the transaction speedily and save the clients expense by engaging one common advocate; this fact alone is for convenience only and does not affect the general principle that he should not so act or divulge the confidential information received by him from one client to the other client or clients without the consent of the client in the retainer imparting the confidential information. The corollary to this cardinal principle is that the advocate having so acted for two or more clients should be wary to act for one client against the other client or clients in a subsequent action or litigation concerning the original transaction or the subject matter for which he acted for the clients as their common advocate. The reason for this is not farfetched. The information or knowledge so acquired and which is confidential by reason of the fiduciary relationship between the opponent client and the common advocates will place the other client or clients at a disadvantage occasioning prejudice if that knowledge or information is used against them by the common advocate in a subsequent litigation arising from the original transaction or subject matter for which he acted for the clients as their common advocate. As such the conflict of interest is apparent and the common advocate should not act for one of his client or clients against the other client or clients in a subsequent litigation arising from the original transaction or the subject matter.
Page 252 of [1990–1994] 1 EA 244 (CAK)
I am persuaded to adopt the rule as has emerged since in Rukesen v Ellis Munday and clerk as reported in Orderly on Solicitors (7ed) at 70:
“A solicitor who has been retained by a client is under an absolute duty not to disclose any information of a confidential nature which has come to his knowledge by virtue of a retainer, and to exercise the utmost good faith towards his client not only for so long as the retainer lasts but even after termination of the retainer, in respect of any information acquired during the course of and by virtue of the retainer and the Court will restrain the solicitor by injunction from any breach likely to damnify the client and award damages for breach. There is no general rule prohibiting a solicitor who has acted for one client in a matter acting for an opposite party in the same matter, but where a solicitor owes a duty to a third party which conflicts his duty to a particular client he is not relieved of his duty to the client.”
It is clear from the proceedings before this court that Counsel Justin Semuyaba whose signature clearly appears as the draftsman applying for judgment in the previous suit is privy to information concerning the conduct of the suit from which arose a claim against the applicants. There is a real danger that such information will be used to the prejudice of the former Greenland Banks interest which interests now are vested in the receiver. The receiver acts on behalf of Greenland Bank and may recover whatever owed to Greenland Bank. Secondly they object to Counsel Semuyaba. I do not agree that the law firm is different. Semuyaba, Iga and Co Advocates owe a duty of confidentiality to Greenland Bank and its receivers. There is a real danger that the information they possess would be prejudicial to the Respondents. I do not agree that the Respondents are different parties. The question of whether a party was represented by counsel can be deduced from a careful perusal of the correspondence in the matter. (See Uhuru Highway Development Ltd vs. Central Bank of Kenya and Others [2002] 2 EA 654). It is my finding of fact after careful perusal of the correspondence that it is the same firm handling the present application which handled the suit against the Applicants with the difference that one Partner left the firm. Moreover the objection to the claim against the Applicants arose from the suit or is an outcome of that suit. Correspondence attached also show that money for sale of the Applicants property was paid to the firms lawyers. I refer to the letter of Victoria General auctioneers, Court Bailiffs, Government Auctioneers and rent Collectors dated 31st March 1999, which shows that the property was sold on application of Messrs Birungi, Semuyaba and Iga Advocates and proceeds of sale given to the “firms lawyers” (See paragraph 3 of letter and the property referred to is LRV 1597 Folio 20 plot 1 Baxi Close Jinja sold at 20 million). In the circumstances the actions of Justin Semuyaba is likely to prejudice the interest of Greenland Bank under liquidation. He is therefore disqualified from having audience before this court on this matter.
What happens to the applicant’s application then? I agree that section 14A of the Advocates (Amendment) Act, 2002 deals with this situation. No Pleadings, contract6 or other document made or actions taken on behalf of a client shall be invalidated by disqualification of an Advocate from representing a client for any reason. The actions of the Applicants Counsel prior to objection to his appearing are saved by this provision. I will therefore consider the merits of the application.
The applicants through counsel submitted firstly that the intended execution by the first and second defendant is illegal as it was conducted under in null and void transaction because execution had been conducted by Victoria General Auctioneers Court bailiffs Government Auctioneers and Rent collectors on 5 February 1997 wherein they sold the properties of the plaintiffs comprised in LRV 1483 folio 16 Ngobi Road Iganga and LRV 1597 folio 20 plot 1 Baxi close Jinja to recover shillings 80,089,250/=. Counsel quoted section 3 (3) of the Limitation Act which provides "an action shall not be brought upon any judgement after the expiration of 12 years from the date on which the judgement became enforceable, and no arrears of interest in respect of any judgement date shall be recovered after the expiration of six years from the date on which the interest became due." Furthermore section 1 (8) (b) of the Limitation act "in the case of an action upon the judgement, be construed as references to the date on which the judgement became enforceable." Counsel submitted that 12 years have elapsed since 11 June 1996. Counsel submits that it is 14 years since those events happened. That clearly execution is statute barred to recover under the same degree as 14 years have elapsed now.
Secondly, counsel submitted that the intended execution by the first and second defendants is illegal insofar as it is conducted under a null and void transaction as they has been execution conducted by Victoria General Auctioneers Court Bailiffs Government Auctioneers and rent collectors dated 5th of February 1997 whereby they sold certain properties of the plaintiffs mentioned above. He submitted that the plaintiffs have been forced to make payments and the first and second defendants have been charging interest on the plaintiffs account formerly run at Greenland bank.
The applicants counsel submits that the central bank having taken over the property and assets of the financial institution and its management, the bank ceased to exist and could no longer charge interest. This is because Greenland bank had been wound up. Moreover there was judgement and decree and warrant for Uganda shillings 80,089,250/=.
The applicant also submits that the appointment of the second defendant asset debt collector against the plaintiffs is a wrongful and illegal and null and void since it is based on an already executed decree. The applicant contends that the bank cannot recover: using court and at the same time using the Mortgage Act, the Registration of Titles Act, and the Companies Act to appoint receivers and liquidators when execution was already carried out because as already stated the recovery process is statute barred by reason of limitation. No processes have been commenced under any of these statutes as that is why an injunction is demanded here.
The Applicant further contends that it would suffer irreparable injury or damages. They submit that if the injunction is not granted the main suit will be rendered nugatory and the applicants would suffer irreparable damage which cannot be atoned for by way of financial compensation as their business image is being injured. Further the purported demand is not proper under the Civil Procedure Act and the rules there under. That the Respondents/Defendant is guilty of bad faith and if not halted will continually cause loss and damage to the Applicants/Plaintiffs. They submit that the credit manager standard bank chartered received a letter asking for particulars of the mortgage in the bank executed by the first applicant of property comprised in block 51/53, Nkrumah road Kampala. That if the respondents sold this property the Applicants would suffer irreparable loss and damage.
On the balance of convenience counsel submitted that Greenland bank executed against the plaintiffs and sold plot 1 Baxi Close Jinja LRV 1597 folio 20 and unfinished houses sold at 20 million by then. In addition LRV 1483 folio 16 Plot 6 Ngobi Road Iganga a completed homes – in 1986 or belonging to the applicants/plaintiffs but the proceeds were not accounted for by the auctioneers appointed by the High Court.
The submission of the Respondents counsel on whether to debar counsel for the Applicants has already been considered. He further submitted that it is not true that the respondents are on the verge of appointing a receiver to sell or auction or dispose of the Applicants property or evict or intimidate the Applicants. (As stated in the application). He submitted that there was no cogent evidence adduced before court.
That the process of attachment and sale or otherwise in the execution process is that the court bailiffs or officers of court act under the instruction and supervision of court which the Respondents are not and have not instructed any to pursue the process on behalf of the Respondents. That the respondents are not trying to recover under an already executed unsatisfied decree but are fully demanding the balance of the principal sum and interest thereon that remain unsatisfied after the execution process only realised Uganda shillings 20 million instead of Uganda shillings 80,089,250/= plus interest which was ordered by court in High Court civil suit No. 478 of 1996.
That the applicants are aware of their debt obligation and even paid Uganda shillings 5 million to the Respondent without coercion or intimidation. On preservation of status quo the Respondents counsel submitted that the applicant’s case presented fall sort of the requirements laid up by the authorities (Noor Muhammed Janmohamad vs. Kassamali Virji (1953) 20 EACA 80. This is because:
1.      
The first respondent is in liquidation and a receiver was appointed to collect its debts and mind its affairs for purposes of winding up over 10 years ago a process which is still ongoing.
2.      
That the second respondent was appointed by Bank of Uganda, the official receiver to collect debts on its behalf. (A fact which the applicants are challenging in the head suit as wrongful, and also in this application).

 

3.      

 

That the second respondent lodged a caveat on the applicant’s properties comprised in block 51/53 Nkrumah road to prevent them from selling or disposing of the same or in order not to defeat the respondents claim.
Counsel submitted that the applicants are not seeking relief to maintain the status quo but are trying to obtain one of the final prayers and at the head suit which will affect the merit of the trial in the main suit pending before this court. For instance, a temporary injunction cannot be issued to restrain the respondents from appointing a receiver as this was already done. Secondly, the applicants are seeking to remove a caveat which has already been lodged. Prayed that the court should dismiss the application.
On whether there is a prima facie case with a probability of success, counsel submitted that the claim is frivolous and vexatious. Counsel submitted that as far as the law of limitation is concerned under section 3 (3) of the Limitation Act the law provides for the defence and not attack. The respondents are defendants in the head suit and have not brought in the action as envisaged by this section. Counsel further submitted that the word "action" is defined by section 1 (1) (a) of the Limitation Act as follows: "action" includes any proceedings in the court;" therefore as the is no suit pending proceeding by the respondents in any court to enforce any judgement against the applicants would carry out in the execution there is no suit pending with a probability of success and equality like the first ground this ground has no merit and should fail.
As far as the appointment of a receiver is concerned, this is disguised to obtain the final prayers in the suit i.e. prayer (b) thereof.
As far as irreparable loss is concerned the applicants have failed to adduce any cogent evidence of the nature of the loss, injury or damage that there were likely to suffer if no injunction is granted.
As far as balance of convenience is concerned Counsel for the Respondent submitted that it is contested that the amount claimed was never recovered and this is a triable issue that should await the outcome of the main suit.
I have carefully considered the pleadings of the parties and the written submissions of both Counsel. The law on which this court exercises discretion whether to grant injunction or not is not in dispute. For the record I will refer to the case of Giella v Cassman Brown And Company Ltd [1973] EA 358. Where it was held that an applicant must show a prima facie case with a probability of success, Secondly, an interlocutory injunction would normally not be granted unless the applicant might otherwise suffer irreparable injury, which would not be adequately compensated by an award of damages and thirdly, if the court is in doubt, it will decide an application on the balance of convenience. The purpose of an injunction is to maintain the status quo until the dispute to be investigated in the suit can be finally disposed of Noormohamed Jan Mohamed vs. Kassamali Virji Madhani [1953] EACA
Whether there is a prima facie case, the applicant’s plaint is for declarations and consequential reliefs. The declarations are founded on points of law as to the legality of alleged threatened execution against the applicants especially in relation to appointment of receivers or management of their business/property, evicting or intimidating the plaintiffs which the applicants content is or would be null and void in law. It is not proper in an interlocutory application based on affidavit evidence to comment on points of law which would tend to prejudge the merits of the suit. I would refer to the principle stated in the case of American Cynamide Co. v Ethicon [1975] 1 ALL E.R. 504 per Lord Diplock at 510 paragraphs d – f.
It is not the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the status of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial.
However to comment briefly and demonstrate the above point of the danger of making comments on points of law in this matter, counsel for the applicants submission is that the execution would be barred by section 3 (3) of the Limitation Act. I agree with counsel for the Respondent that this section clearly does not apply. It is the applicants who filed a suit. The section bars an action founded on a judgment. An action is a proceeding commenced in a court. An action is a suit commenced in any manner prescribed under section 19 of the Civil Procedure Act. The manner of commencement of the action is prescribed by the rules of court, i.e. see section 2 of the Civil Procedure Rules which interprets the word “prescribed” to mean prescribed by the rules. The Respondents have not commenced any action in any manner prescribed and the Limitation Act cannot apply to them under the above section. The section is simply a defence to a suit or an action commenced in a court of judicature.
Though the Civil Procedure Act limits execution after a certain number of years, its provisions under Section 35 (1) deal with limitations to execution. I will not quote this section for obvious reasons as it would be in issue in the main suit. However should I decide whether it applies only to execution process in court or to a tortuous or other modes of action be they tortuous or in breach of contractual obligations? Does the section only deal with execution through court process? Presumably this may be a triable issue. Its answer however resides in the reading of the section itself. So far there is no evidence adduced by affidavit that the Respondents have applied for execution within the intent of section 35 (1) of the Civil Procedure Act. As to whether the Applicants will be entitled to the declarations sought would depend on the basis of their argument in the main suit. I decline to comment on that. I further decline to comment in view of the Applicants having filed yet another application in this court namely Miscellaneous Application No. 490 of 2010 in which the applicants seeks remedies of interpretation of law that if upheld, would dispose of the main suit. These are the same points the applicants want to be decided in an interlocutory application for injunction. The said application for settlement of the suit on points of law seeks the following remedies:

1.      
That serious points of law raised in pleadings relating to execution and limitation in the present suit regarding H.C.C.S. No. 478 of 1996 and other materials on record in the suit be heard and immediately disposed off.
2.      
The points of law and fact raised in the pleadings relating to execution and limitation regarding HCCS 478 of 1996 substantially dispose of the Respondents/defendants defence in the present suit and since there is no counterclaim of the respondent/defendants, the respondents defence should be dismissed forthwith and the applicants/plaintiffs and prayers in the plaint therein be allowed with costs and shs 5,000,000/= paid by the applicants /plaintiffs to the respondents/defendants be refunded forthwith.

 

3.      

 

The main suit shall be set down for hearing of the applicants/plaintiffs claim by way of formal proof for general and aggravated damages incurred by the applicants/plaintiffs....”
From the above it is clear that the Applicants contention is that the suit can be decided on points of law. Why should the court not proceed to decide the points of law as they finally resolve the main dispute?

On the issue of maintaining the status quo, the property on Nkrumah road is not in danger of being attached or sold because there is a caveat lodged thereon. It cannot be sold without the applicants been engaged in a court process or appearing before the Commissioner For Land Registration. There are now elaborate procedures under the Mortgage Act 2009 before any mortgaged land may be sold. See sections 19 – 32 thereof. The letter on record annexure “A” to the further affidavit in rejoinder of Azalia Lubega shows that Standard Chartered Bank has an interest in the property at Nkrumah Road. Presumably this is a mortgage. Greenland Bank or the Respondents as appears from the submission of the Respondent have also lodged a caveat. The caveat cannot be removed by injunction but by specific proceedings under the Registration of Titles Act. It is my observation that nothing can happen to this property without a court order or warrant for eviction or sale. The Applicant need not panic.

There is no evidence that the Respondents have the power or are likely to appoint a receiver for the first applicant company. All in all the resolution of the issues in this application should be handled in the main suit.

I am not satisfied that the applicants would suffer irreparable injury which may not be adequately compensated by an award of damages if an injunction is not granted. The fears of the applicant can be handled in the main suit itself. The man suit will not be rendered nugatory if the injunction is not granted for the reasons stated above. The arguments on points of law should be reserved for the main suit. The main suit can be resolved expeditiously, if as the applicant contends, the suit revolves on and can be wholly be settled on points of law. I direct that the main suit be fixed together with the applicant’s application for hearing on points of law as soon as possible.

In the above premises and exercising my discretion as to whether to grant an injunction which is an equitable remedy, I decline the Applicants application and dismiss the same with costs.

 

Signed and delivered by Court this 3rd day of February 2011.

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Hon. Mr. Justice Christopher Madrama

Ruling delivered in the presence of:
Open Court
No one for the applicants
None for the Respondents
Patricia Akanyo court recording assistant.
Ojambo Makoha Court clerk

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Hon. Justice Mr. Christopher Madrama