Court name
Commercial Court of Uganda
Case number
Miscellaneous Application 1084 of 2014
Judgment date
30 January 2015

Comform Uganda Ltd v Megha Industries (U) Ltd (Miscellaneous Application 1084 of 2014) [2015] UGCommC 24 (30 January 2015);

Cite this case
[2015] UGCommC 24

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

 

MISCELLANEOUS APPLICATION NO.1084 OF 2014

(ARISING FROM MISCELLANEOUS CAUSE NO. 21 OF 2014)

 

COMFORM UGANDA LIMITED …………………….……APPLICANT

 

VERSUS

 

MEGHA INDUSTRIES (U) LTD………………………..…… RESPONDENT

 

 

BEFORE: LADY JUSTICE FLAVIA SENOGA ANGLIN

 

RULING

 

 

By this application brought under S.98 of the CPA, and O.51 rules 1, 2, and 3 of the C.P.R the Applicant sought orders of this court staying execution and /or implementation of the orders made in Miscellaneous Cause 21/2014, until the determination of the appeal against the said orders.

 

Costs of the application were also applied for.

 

The grounds of the application were set out in the affidavit /affirmation of Kajubi Muhammad Ali that was read and relied upon at the hearing.

 

The Applicant contends that they were dissatisfied with the ruling and orders of this court in Miscellaneous Cause No. 21/2014 and have filed a notice of appeal against the suit.

 

That the intended appeal raises serious issues that merit judicial consideration by the Court of Appeal and has high likelihood of success.

 

The Applicants claim that they will suffer substantial loss if the orders in Miscellaneous Cause No. 21/2014 are executed and /or implemented.

 

The Applicant is ready and willing to provide security under the law as may be required as a prerequisite for stay of execution.

 

And it is in the interests of justice that this application is granted.

 

There is an affidavit in reply deponed by Mwesigye Myers, the Operating Manager of the Respondent Company; where it is contended that the application is misconceived, bad in law, incompetent and an abuse of court process and ought to be dismissed.

 

The Applicant has been found to be in contempt of court in C.S. 269 and Miscellaneous Cause No. 21/2014, and has never compiled with any of the court orders in those suits.

 

That the grounds of appeal have no merit and appeal is not likely to succeed.

 

The deponent set out the losses incurred by the Respondent as a result of the continued infringement of the court orders by the Applicant – paragraph 8.

 

Asserting that the Applicant has not provided grounds for grant of the application, the Respondent contended that it was only just and equitable that the application be dismissed with costs.

 

An affidavit in rejoinder was deponed by Zhao Jia the Operations and Sales Manager of the Applicant Company.

 

At the hearing of the application on 15.12.14, the deponent of the affidavit in support was cross examined on the affidavit.  Among the things he stated was that the Applicant Company is making losses but he may not be able to tell the profits made.

 

He confirmed that he sits on the Board meetings and is aware that the Applicant Company is servicing loans and if the sum ordered by court is to be paid, then the Company is likely to collapse as the sum is colossal.

 

It was then agreed between Counsel that the objection to the application will be raised in the reply.

 

It was then submitted by Counsel for the Applicant that the application was based on the provisions of the law cited and case law – that is Miscellaneous Application 485/2 Global Capital Save Ltd and Another vs. Alice Okiror and Another.

 

And that court in applications of this nature is guided by three factors.

 

  • Substantial loss – that Applicant had made out a case and if stay is not granted, the Company would suffer substantial loss – paragraph 7 of the supporting affidavit and affidavit in rejoinder paragraph 4.

 

  • If the amount of money decreed by court is taken out of the Company, it will have a significant impact on the Company, which might have to close business.

 

Counsel relied upon the case of Global Capital Save Ltd (Supra) where court found that the sum of shs. 360,000,000/- was substantial and would lead to loss.

 

Further that the application was made without undue delay – which answers the question whether execution is in motion – as a party who intends to appeal has to seek orders promptly.

 

  • As to the requirement to give security for due performance of the decree, Counsel said it can be furnished before application or after court’s decision.  And the case offers guidance on the kind of security that can be given.

 

That to prevent likely costs, court can order a percentage of the decretal to be paid.  He relied upon Supreme Court case where 14% of the decretal sum was directed to be deposited.

 

As to staying execution when only notice to appeal has been filed, Counsel referred to r.6 of the Court of Appeal rules – to say that notice of appeal is sufficient.  Rule 42 (1) Court of Appeal rules requires that application first be made in High Court.

 

Praying court to allow application, Counsel asserted that the intended appeal raises questions that merit judicial consideration. For example that by ordering high exemplary damages, the Applicant was punished twice, also taking into account that there is a suspended sentence.

 

In reply, Counsel for the Respondent contended that the application is incompetent, bad in law and raises no issues to warrant grant of remedies applied for, for the following reasons:-

 

  • The application arises out of orders made by court in Miscellaneous Cause 21/14 in respect of contempt of court orders.

 

The matter should be at execution stage and this application is raising grounds to try and convince this court that there are grounds for appeal.

 

The case relied upon for conditions to grant leave to appeal is noted but the conditions relied upon in this case are not sufficient.  And in essence, the Applicant is praying court to review its orders.

 

There is also no execution going on and therefore nothing to stay.

 

In its ruling sought to be appealed against, the court emphasized the importance of obeying court orders and relying on several cases, Counsel asserted that there can be no relief for the contemnor until they have purged themselves of the contempt which the Applicant has not done in this case, but just continued to disobey court orders.

 

It was then prayed that application be dismissed.

 

Also that, looking at the law under which the application is purported to be made, there is no provision for the orders that Applicant is seeking.

 

The authority relied upon by Counsel for the Applicant is based on a different law and cannot apply to the present application.

 

This leaves the application only based on S.98 C.P.A – which grants court inherent powers.

 

Inherent powers, Counsel submitted rest on the discretion of the court. – The case of Yahaya Kaliisa vs. Attorney General and Another S.C C.A 07/94 where Justice Manyindo described what discretion means was relied upon.

 

And Counsel argued that in the present case, it would not be just, fair, right and reasonable to grant this application considering that there is no execution initiated and therefore nothing to stay.

 

And there is no evidence of substantial loss to be suffered by the Applicant.

 

  • No indication given by the deponent of the supporting affidavit where as the Respondent has shown in the affidavit in reply, the declining sales being suffered by the Respondent.

 

And Respondent has capacity to refund if appeal succeeds.

 

Earlier prayers were maintained.

 

In rejoinder, Counsel for the Applicant insisted that even with the wrong provisions of the Civil Procedure Rules cited, this court still has inherent powers under S.98 C.P.A to grant orders sought.

 

He cited Article 126 (2) of the Constitution in support and the case of Tropical Commodity Suppliers Ltd and 2 Others vs. International Credit Bank Miscellaneous Application 379/2003 paragraphs 4-6.

 

Court was then urged to ignore the objection raised by Counsel for the Respondent.

 

Also that despite Execution Division, this court has powers to hear matters concerning execution.

 

The case of New Vision vs. Ntabgoba (Supra) is distinguishable from the present is irreparable loss is different from substantial loss.

 

  • Referred to the Global Capital case.

 

Counsel insisted that pulling money out of the Applicant Company and holding it while appeal is going on would gravely affect company.

 

Whether leave to stay execution / implementation of orders Miscellaneous Cause 21/2014 pending appeal should be granted.

 

In determining the above question, court will first deal with the objection raised by Counsel for the Respondent that the application was brought under the wrong provisions of C.P.R.

 

Courts have consistently held that “the citing of the wrong law is not fatal to an application as the essence of all disputes should be heard and determined”.  In this case, it is apparent that the Applicants were mainly relying on the provisions of S.98 C.P.A which grants court inherent powers to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of court.

 

In the cases where appeal does not lie as of right, as in the present case, courts have established that “leave to appeal is not granted automatically, but depends on whether the applicants can show that they have grounds of appeal which merit serious consideration”Bandali vs. Willis [1990 – 94] IEA 44 (CAK).

 

The Applicants in the present application contend that the intended appeal raises serious issues that merit judicial consideration by the Court of Appeal and which have a high likelihood of success.  Counsel asserts that the question concerning high exemplary damages and suspended sentence that amount to punishing the Applicant twice merits consideration by the Court of Appeal.

 

However, I am not persuaded by the arguments of Counsel for the Applicant as I will show later in this ruling.

 

While court is aware that it has power in its discretion to grant stay of execution, “this power ought to be exercised judiciously and where it appears equitable to do so; with a view to temporarily preserving the status quo.  As a general rule, the only ground for stay of execution is for the Applicant to show that once the decretal property is disposed of, there is no likelihood of setting it back should the appeal succeed”.  - Refer to C.A Miscellaneous Application 07/98.

 

In the present case, there is no property to be disposed of.  The Applicant is required to pay penalties for continued contempt of court orders.

 

The Applicants have consistently failed, and or refused to comply with this courts’ orders right from C.S. No 269 where they entered into a consent judgment to stop duplicating the Respondent’s mattresses.  They failed to comply with their consent judgment, as a result of which the Respondents filed Miscellaneous Cause 21/2014 for contempt.

 

In that application, the Applicants then Respondents were found to be in contempt of court orders and orders were made requiring them to comply and also penalizing them for the continued contempt.  These are the orders they are seeking to stay by this application, without any indication that they have purged themselves of the contempt.

 

Superior courts have held that, “a party in contempt of court by disobeying an existing order cannot be heard in a different, but redated cause or motion, until such a person has purged himself or herself of that contempt”. – Refer to C.A. Constitution Court of Uganda Application 19/2011Musisi and Another vs. Namugenyi Margaret and HadKinson vs. Hadkinson [1952] 2 ALL ER 579

 

While the Applicants contend in the present matter that they cannot comply with the orders of this court because to do so would mean winding up of the company, which they claim has made substantial losses, the losses made are not explained and it is also not known why they have continued to disobey the orders of court.  They consented to.

 

As stated in the case of Wildlife Lodges Ltd vs. County Council of Narok and Another [2005] EA 344 (HCK) - “A court of law never acts in vain and as such, issues touching on contempt of court take precedence over any other case of invocation of the jurisdiction of the court.”

 

This court therefore finds that, the Applicants cannot have courts discretion exercised in their favor before they have purged themselves of contempt.

 

To hold otherwise would be encouraging impunity by litigants who find court orders unpleasant and decide to disobey them.

 

The application is disallowed for all those reasons and dismissed with costs to the Respondent.

 

 

 

 

 

 

 

 

 

 

 

FLAVIA SENOGA ANGLIN

JUDGE

30.01.15