Court name
Supreme Court of Uganda
Judgment date
3 March 2004

Noble Builders (U) Ltd and Anor v Jabal Singh Sandhu (Civil Application-2002/15) [2004] UGSC 12 (03 March 2004);

Cite this case
[2004] UGSC 12

IN THE SUPREME COURT OF UGANDA

AT MENGO


CORAM: J.N. MULENGA JSC

CIVIL APPLICATION NO.15 OF 2002

BETWEEN

1. NOBLE BUILDERS (U)
LIMITED
2. RAGHBIR SINGH
SANDHU:::::::::::::::::::::::
-.APPLICANTS

AND

JABAL SINGH SANDHU::::::::::::::::::::::::::::::::::RESPONDENT

RULING.
By a Notice of Motion dated 26th
September 2002, brought under r.100 (3) of the Supreme Court Rules, 1996, the
above named applicants apply for orders that -

(a) The respondent furnishes further security for costs, past costs and costs
of civil appeal No.41 of 2002 within a period determined
by the court, failing
which the appeal be dismissed with costs.

(b) Costs of and incidental to this application, be provided for. The
application is supported by the Affidavit of Raghbir Singh
Sandhu, the
2nd applicant, sworn on 27 September 2002, and his several
Supplementary Affidavits sworn on subsequent
dates.



The background to the application is
very brief. On 19th September 2000, in Companies Cause No.16 of 2000,
the respondent petitioned the High Court for orders to wind up the
1st applicant and declare the 2nd applicant a delinquent
director. The High Court entered judgment for the respondent, granting the
orders for which he had applied.
The applicants successfully appealed to the
Court of Appeal, which on 20th May 2002, set aside the judgment of
the High Court and awarded to the applicants, costs of the appeal and of
proceedings in the High
Court. The respondent appealed to this Court in Civil
Appeal No. 13 of 2002, which has not yet come up for hearing.


In the
meantime, the applicants filed bills of costs in the two lower courts. At the
time of hearing this application, the applicants'
bill of costs in the High
Court had been taxed and allowed at shs.28,079,000/=; and on reference to a
single judge of the Court of
Appeal, their costs in that court, had been reduced
to shs.6,085,400/=. The applicants contend that the total costs so far owing
from the respondent is shs.34,164,400/=, and that they will incur further costs
in respect of the appeal pending in this Court.


Apart from asserting
that the costs so far incurred in the lower courts are quite substantial, the
applicants base this application
on the grounds that -

The respondent is a
foreigner currently resident in Canada, without any property or investments in
Uganda.
The respondent's appeal has no
likelihood of success.

• It is in the interest
of justice, to order for further security for costs. In his Affidavit in Reply,
Jaspal Singh Sandhu,
the respondent, avers that he has not refused or failed to
pay the costs, and that there is no ground for suspecting that he will
be unable
to pay if he loses the pending appeal as he is not impecunious. He also avers
that his appeal to this Court is not devoid
of merit; and that the applicants
have not shown special circumstances to justify the need for further security
for costs.


At the hearing of the application, Mr. Byenkya, learned
counsel for the applicants submitted that the purpose for security for costs
pending disposal of an appeal, is to ensure that a party who has been successful
in the lower courts is not left without recourse
for his costs, in the event of
repeated success in the further appeal. He maintained that in the instant case
the applicants had
already incurred substantial costs in the sum of over
shs.34m/=, which was likely to increase by about another shs.10m/=, in respect
of the pending appeal. Counsel argued that because the respondent does not
reside, and has no assets or investments, within the court's
jurisdiction, the
applicants would be left without recourse in the event of their likely success
in the pending appeal. According
to learned counsel, the statutory sum of
shs.400,000/= deposited in court as security for costs is utterly inadequate. He
stressed
that a successful party should not be left to the vagaries of having to
pursue costs through proceedings in foreign jurisdictions.
He relied on the
decision in Atul Kumar Patel vs. American International Banking
Corp.
, Civil Application No.9/89. While conceding that security
for costs should not be used to stifle further appeals, he proposed that
having
regard to the circumstances of the instant case, the sum of shs.50m/= would be a
reasonable amount for further security. Mr.Mubiru-Kabenge,
learned counsel for
the respondent, submitted that the order for security for costs is
discretionary, and the courts use it sparingly.
According to him, the order for
security for costs is appropriate only where there is evidence to show inability
to pay. Non-payment
of past costs, residence outside of the court's jurisdiction
and lack of assets or investments therein, are not evidence of inability
to pay.
He conceded that residence outside jurisdiction is a factor the court may take
into consideration, but argued that it is
not sufficient ground alone. He
pointed out that Canada is within the Commonwealth, so that, pursuant to the
Judgment Extension Act
(Cap. 12) and the Reciprocal Enforcement of Judgments Act
(Cap.21), if the applicants succeed in the pending appeal, they would not
find
it difficult to recover their costs in Canada. Counsel also stressed that the
court should not allow an order for security for
costs to have the effect of
fettering the appeal process. He contended that in the instant case, an order
for further security for
costs could drive the respondent from the seat of
justice. He submitted that though the respondent was able to pay, he would find
it imprudent to tie so much money in court instead of putting it to profitable
use. In support of his submissions, counsel cited
U.C.B. vs. Multi
Constructors Ltd.
Civil Appeal No.29/94 (SC); Bank of Uganda vs.
Joseph Nsereko & Others,
Civil Application No.7/02 (SC);
Porzelack KG vs. Porzelack (UK) Ltd (1987) 1 All ER 1074 and
De Bry vs. Fitzgerald and another (1990) 1 All ER 560.

Rule 100 of the Supreme Court Rules, 1996 provides as follows -

(1) Subject to rule 108, there shall be lodged in Court on the institution
of a civil appeal as security for the costs of the appeal
the sum of shs.400,
000.

(2) Where an appeal has been withdrawn the Court
may,....direct the cross-appellant to lodge in the Court as security for costs,
the sum of shs. 400, 000 or ... less.... (3) The Court may, at any time, if
the Court thinks fit,
direct that further security for costs be given and
may direct that security be given for the payment of past costs relating to the
matters in question in the appeal.

Under r.108 the Court may, on
application, exempt an appellant from depositing security for costs if it is
satisfied that the appellant
lacks the means to pay, and that the appeal has a
reasonable possibility of success.

I deduce from those two rules that the general principle is that an appellant
should provide security for costs of the appeal, unless
the Court exempts him
due to inability. It is noteworthy that even a party who files a cross-appeal
with no obligation to deposit
any security for costs, may subsequently be
required to do so if the main appeal is withdrawn. In addition, the Court may
direct
the appellant, in appropriate circumstances, to increase the security for
costs of the appeal; and/or to deposit security for past
or earlier costs. All
this tends to portray security for costs in civil appeals as the norm rather
than the exception. Nevertheless,
it is well settled that the burden lies on the
applicant to show sufficient cause why the appellant should furnish further
security
for costs, over and above the amount fixed by the rules. What amounts
to sufficient cause, is a matter for the Court's discretion,
depending on the
circumstances of the case before it.

One of the grounds of this application is that the respondent's appeal has no
reasonable chance of success. I am inclined to the view
that demonstrable lack
of reasonable chance of success for an appeal is sufficient cause for the court
to order an appellant to furnish,
not only further security for costs of the
appeal, but also security for past costs. In the instant case, however, the
applicant's
contention that the appeal has no reasonable chance of success is
countered by the respondent's contention that his appeal is not
devoid of merit.
Neither party has advanced its contention, by evidence or argument, beyond the
mere claim, albeit by affidavit,
that it hopes to succeed. I cannot place
reliance on either contention. Secondly, although Mr. Mubiru-Kabenge sought to
make his
client's ability to pay the costs an issue, the application is not
based on any allegation that the respondent is unable to pay.
Perhaps what is
nearer to the point is the respondent's willingness to pay the costs, since he
has not paid the costs so far incurred.
What is more, I do not accept that
inability to pay per se is the only ground for ordering security for
costs. I therefore do not need to consider whether the respondent is able to pay
the
costs in the event of losing the pending appeal.


The significant
ground in support of the application is the assertion that the respondent is a
foreigner who resides in Canada, and
who has no property or investments in
Uganda. The respondent does not expressly admit or deny the assertion. He merely
contends in
paragraph 7 of his affidavit in reply, that, "the assertion is
not supported by any evidence and is no proof of inability to pay".
The
2nd applicant retorts in his supplementary affidavit of 14 Nov. '04
-"4. In reply to paragraph 7 of the respondent's affidavit in reply.... I
personally know the respondent and he has lived in Canada
with his family since
the early 1990's and I know of no assets that belong to him in Uganda against
which execution can issue should
we be successful in the appeal. 5.1 verily
believe that his lack of property in Uganda is the reason why he does not name
any assets
that belong to him in his affidavit in reply."

All this is
affidavit evidence, which the respondent does not contradict. In my view, it is
sufficient proof that the respondent is
a foreigner, who is ordinarily resident
outside the court's jurisdiction, and who has no assets in this country. This
factor is significant
because it lends weight to the applicants' fear that if
they succeed in the pending appeal, they might not readily recover the costs
awarded to them. In default of voluntary payment of the costs, neither the
person nor the assets of the respondent would be available
within the court's
jurisdiction for attachment.


The respondent's principal response is
that in case of such default, the applicants would be able to enforce the orders
for costs
through execution proceedings in a Canadian court, by virtue of
provisions of the Judgments Extension Act, (Cap. 12) and the Reciprocal
Enforcement of Judgments Act, (Cap.21). Cap.12 makes provision for the
execution, in Uganda through Uganda courts, of decrees and
warrants issued by
the courts of Kenya, Malawi and Tanzania. Cap.21 makes similar provision for
judgments of superior courts in the
United Kingdom and the Republic of Ireland.
Each of the two Acts empowers the Minister, by statutory order, to extend the
application
of the Act to judgments of courts in any other Commonwealth country.
In the view of the respondent's counsel, a Ugandan court order
would be
enforceable in Canada - a Commonwealth country, without difficulty. It is in
this context, that learned counsel invited
me to follow the two English
decisions in Porzelack KG vs. Porzelack (UK) Ltd (supra) and De Bry
vs. Fitzgerald and another
(supra), in each of which the defendant's
application for security for costs on the ground that the plaintiff was a
foreigner resident
outside the court's jurisdiction, was rejected. In rejecting
the application, the court took into account inter alia the Civil
Jurisdiction and Judgments Act 1982 of the U.K., which gave effect to a
convention on enforcement of judgments within EEC
countries. Under that
convention, enforcement of judgments of courts of one EEC member country in
other member countries is relatively
easy.


I am not persuaded to
follow those decisions for two reasons. First, the applications in those cases
were rejected on basis of several
considerations, which are not applicable to
the instant case. In the Porzelack's case, the court noted that
under the convention the defendant was availed "substantial and improved
rights"
to enforce an order for costs in West Germany and considered that to
be "an important but not decisive" factor. One of the other factors it
took into consideration was that if it ordered the security for costs on the
scale requested,
the plaintiffs action would be stifled. In De Bry's
case
,
the Court of Appeal set aside an order for security for costs made
by the lower court. It criticised the judge of first instance for
failing to
appreciate that by virtue of the said convention, enforcement of an English
judgment within the EEC was prima facie relatively
cheap and effective. In
addition to that, however, the court took into account the fact that the
plaintiff had, within the court's
jurisdiction, a considerable fund, albeit of
yet unascertained value, which could be used to satisfy any order for costs made
against
him. The circumstances of the two cases are distinguishable.

My second reason is that the respondent has not laid any foundation for his
submission on this aspect. While it is not disputable
that Canada is a
Commonwealth country, the respondent does not show, by affidavit or otherwise,
that the Minister ever extended application
of either Cap. 12 or Cap.21 to
judgments of Canadian Courts. More importantly, the respondent does not show
that judgments of Ugandan
courts are enforceable in Canada without difficulty.
It is noteworthy that before making a statutory order under Cap.21, the Minister
must be satisfied that the legislature of such other Commonwealth country has
made reciprocal provisions. Unlike the courts in the
two English cases, I am
unable to say that enforcement of a Ugandan court order for costs in Canada, is
prima facie easy, let alone
cheap.


In De Bry's
case
(supra), Lord Donaldson M.R., referred to Order 23 of the
English RSC, which provides for security for costs, and at p.565 g-i, said
that
its rationale is that -

" a defendant should be entitled to security if there is reason to believe
that, in the event of his succeeding and being awarded
costs of the action, he
will have real difficulty in enforcing that order. If the difficulty would arise
from the impecuniosity of
the plaintiff the court will of course have to take an
account of the likelihood of his succeeding in his claim, for it would be
a
total denial of justice that poverty should bar him from putting forward what is
prima facie a good claim. If, on the other hand,
the problem is not that the
plaintiff is impecunious but that, by reason of the way in which he orders his
affairs, including where
he chooses to live and where he chooses to keep his
assets, an order for costs against him is likely to be unenforceable, or
enforceable
only by a significant expenditure of time and money, the defendant
should be entitled to security."

In my view, that
rationalisation is equally applicable to r. 100 of the Rules of this Court. And
I am constrained to add that having
regard to what I said earlier in this ruling
about security for costs in appeals, the court should even more readily grant
such security
in an appeal where the respondent has incurred substantial costs,
which remain unpaid.


In the instant case, the problem that the
applicants anticipate or fear is because the respondent chooses to live in
Canada and to
have no assets in Uganda. His attitude, as disclosed by his
counsel, that he would rather put his money to more profitable use than
to
secure payment of costs in a litigation he initiated, which is bound to
exacerbate the applicants' fear, is also a matter of choice.
In the
circumstances, I think that this is a fit case where the applicants should be
accorded further security. I therefore allow
their application. I direct that
the respondent gives further security for costs of the appeal and for payment of
past costs, by
depositing in court, within thirty days from the date of this
ruling, the sum of shs.40,000,000/-. I also order that the applicants
shall have
the costs of this application.

DATED at Mengo this 4th of March 2004

J.N. MULNGA
JUSTICE OF THE SUPREME COURT