Court name
Commercial Court of Uganda
Judgment date
11 August 2011

Souna Cosmetics Ltd v Commissioner Customs URA (Misc Appl No 424 of 2011) (Miscellaneous Application-2011/424) [2011] UGCommC 93 (11 August 2011);

Cite this case
[2011] UGCommC 93


THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
(COMMERCIAL DIVISION)
MISCELLANEOUS APPLICATION NO 424 OF 2011
(ARISING FROM CIVIL SUIT NO 267 OF 2011)
SOUNA COSMETICS LTD} ..........................................................APPLICANT
VERSUS

1.      

THE COMMISSIONER CUSTOMS URA}
2.       THE COMMISSIONER GENERAL URA}............................. RESPONDENTS


BEFORE HON. MR. JUSTICE CHRISTPOHER MADRAMA
RULING
I have carefully considered the submissions of counsel and the materials on record. The applicants application is an application for an interim order of injunction to restrain the respondent, its servants and agents, or assigns from auctioning as threatened, disposing off, alienating or in any way dealing with the applicants assorted cosmetics products seized by the 1st Respondent till the hearing and final disposal of the main application.
After the lengthy submissions of counsel, I need to observe that an application for an interim injunction is not an application on the merits but meant to preserve the right of appeal or the right of hearing on the merits which right may be curtailed if the status quo is changed. It would be strange for a judge to consider the grounds for granting an injunction and at the same time after ruling on the same, consider the merits of the main application on the same grounds. The practice has been that such interim measures/orders are heard by the Registrar pending the obtaining of a hearing date before the judge. In this case the Registrar has not been hearing these applications. I must observe that this has absurd results because the same arguments may have to be made again before the judge, why not hear the main application straight away?
The law concerning
an interim stay of execution or injunction is that the court preserves the right of the applicant/appellant to be heard on the merits. This is a very limited jurisdiction which does not deal with the merits of the suit. Hence it is normally handled by the Registrar. The same time used to argue points on the merits if taken before the trial judge can be used to hear the main application. The principles for preserving the right of appeal or the rights of hearing were stated in the case of Wilson V. Church (1879) vol 12 Ch D 454 where it was held that:
As a matter of practice, where an unsuccessful party is exercising an unrestricted right of appeal, it is the duty of the court in ordinary cases to make such order for staying proceedings in the Judgment appealed from as will prevent the appeal if successful from being rendered nugatory.”
This holding was approved and followed in the Supreme Court case of Somali Democratic Republic V. Anoop Sunderial Trean C.A.C.A No 11 of 1988 before Manyindo DCJ Odoki J.S.C and Oder J.S.C. The Supreme Court held that where an unsuccessful party is exercising a right of appeal, it is the duty of the appellate court to prevent the appeal from being rendered nugatory. The Supreme Court quoted Cotton Lord Justice at page 458 of the case of Wilson vs. Church (Supra) where he held that the court would order a stay of execution in order to preserve the applicants right of appeal so that it is not rendered nugatory. At page 459 of the same case Bret Lord Justice held that the law is that court will exercise its discretion so as to stop an appeal from being rendered nugatory.
I agree with the submissions of the applicants counsel that in exercising the discretion to prevent an appeal or application from being rendered nugatory the court does not consider the merits of the application for a temporary injunction. What then does not court consider? It is my decision that the court considers whether the applicant or appellant has a bona fide appeal or application and whether their right to have it heard would be curtailed if an interim measure of injunction or stay of execution is not granted. Therefore all the applicants need to prove before the registrar is that there is a bona fide arguable case for consideration on the merits before the court. That it is necessary to grant an interim measure of protection to preserve the status quo to prevent the appeal or main application from been rendered nugatory. The purpose of the interim measure is to preserve the right of being heard on the appeal or application. Among the sub factors to be taken into account can be whether such a right to be heard exists. In the case of
Wilson vs. Church (Supra) the court exercised its discretion to preserve the right of appeal.
In this case the applicant filed a suit in High Court Civil Suit 267 of 2011 for declarations that the assessment of the applicant to pay
Uganda shillings 56,213,093/= and Uganda shillings 23,893,500/= was erroneous, defeatist and without proper valuation. The applicant also seeks an injunction to restrain the defendants from selling the goods and for general damages. It is alleged in the plaint that the applicant imported the goods from Cameroun and when they arrived in Mombasa, the applicants agents attempted to cross into Uganda with the goods whereupon they were impounded by customs.
The applicant also filed Miscellaneous Application No 423 of 2011 for a temporary injunction and the current application No 424 of 2011 for an interim injunction pending the hearing of the main application. The main ground is that the respondent has threatened to sell the applicants merchandise to wit 2108 cartons of assorted cosmetic products seized by URAs enforcement officers at Busitema. That the main application for a temporary injunction will be rendered nugatory and that the applicant is likely to suffer irreparable injury if the application is not granted.
In his submissions counsel for the applicant contended that the respondent issued a notice of sale on the 20
th of July 2011 that they will sell the goods by the 30th of July 2011. 30th of July 2011 is a Saturday. The matter came before Hon. Justice Joseph Murangira who issued an interlocutory interim order of injunction pending the hearing of the application for an interim order of injunction. On the 2nd of August 2011 the parties appeared in court and had the interim order of injunction extended by consent. As far as the contention of the respondent that some goods were forfeited to the state is concerned, the applicants counsel submitted that where there is forfeiture, prior notice has to be given to the tax payer before the same and that no such notice had been given to the applicant by the respondent.
On the other hand Counsel Peter Mulisa counsel for the respondent raised several points. He contended that any loss that the applicant may suffer can be atoned for by an award of damages and therefore it was not necessary to grant an injunction. He further contended that the applicant was seeking equitable remedies but did not come in court with clean hands in that it had committed several offences in respect to the goods listed in paragraphs 3,4,5,6 and 7 of the affidavit in reply sworn by Bushara H Jalloudh. That the goods were seized on the grounds of smuggling and presentation of false documents. Counsel referred to East African Community Customs form C35 issued under regulation 186 in which a representative of the applicant called Jaafar Mohamed Hijazi accepted the offence of smuggling and presentation of false documents under sections 200 and 203 of the East African Community Customs Management Act. Counsel also referred to annexure “F” to the said affidavit which document is a request by the applicants representative one Dongo David for settlement of the offences. The compounded the offence under the provisions of section 219 of the EAC Customs Management Act 2004.
The respondent wrote a letter dated 20
th of July 2011 for the applicant to clear the penalty charges. Counsel further contended that according to the seizure notice dated 22nd May, 2011 where a settlement is not reached within 30 days, the goods are forfeited. He further contended that the order for payment is not appealable.
In rejoinder Hassan Counsel for the applicant contended inter alia that the contentions of the respondent should be considered when hearing the main application but not in this application for an interim injunction. He maintained that the right of hearing is a constitutional matter and the applicant should not be barred through refusal of this application. He submitted that the goods were not forfeited and time had not yet expired. He further contended that the applicant co
uld only be bound by an authorised signatory.
As far as the submissions of the parties are concerned both counsel have submitted on the merits of the suit and the application for injunction. I am unable to consider these lengthy submissions. I agree that refusing the application for an interim order would mean that the intended sale for which a main application has been filed in court would take place without hearing the applicant on the merits with the result that the main application for injunction will be rendered nugatory. I
decline to comment on the merits of the main application on the basis of submissions of counsels, which comments on the merits would be inevitable if I do. Both counsels should preserve their submissions for the main application. Moreover there is no evidence that the respondent would be prejudiced if its intended sale of the goods it seized from the applicant is stayed at this stage. There is no evidence that the goods are perishable or would deteriorate in quality or value. For the above reasons an interim order of injunction is granted in the terms prayed for in the applicants notice of motion pending the hearing of the main application for a temporary injunction on merits. Costs shall be in the cause.
Dated at Kampala the 12th day of August 2011.

Hon. Mr. Justice Christopher Madrama
Ruling delivered in the presence of
Kamba Hassan for the applicant assisted by Arinomugisha Francis for the applicant
Gloria Twinomugisha for the second respondent
Ojambo Makoha Court clerk
Hon. Mr. Justice Christopher Madrama