THE REPUBLIC OF UGANDA

IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

CIVIL APPLICATION NO. 100 OF 2021

(Arising from High Court Civil Suit No. 721 of2020)

CHINA HENAN INTERNATIONAL

COOPERATION COMPANY LTD ::::::::::::::::::::::: APPLICANT

VS

JUSTUS KYABAHWA I:::::::::::::::::::::::::::::::::: RESPONDENT

10

CORAM: HON. MR. JUSTICE CHEBORION BARISHAKI, JA

HON. MR. JUSTICE STEPHEN MUSOTA, JA
HON. MR. JUSTICE CHRISTOPHER MADRAMA, JA

15 RULING OF COURT

This application was brought under rules 6(2), 43(1) and 44(1) of the
Judicature Court of Appeal Rules seeking for orders that;

1. Execution of the decree in Civil Suit No. 721 of 2020 be stayed

pending the determination of the Applicant’s Appeal.
20 2. Costs of the Application be provided for.

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 The application is supported by the affidavit of Zhang Jinpai, which
contains the grounds upon which this application is premised and
are that;

1. The applicant has lodged a Notice of Appeal, appealing against

5 the judgment and orders of Court in Civil Suit No. 721 of 2020.
2. The applicant’s intended appeal raises serious questions of law
and fact and has a high likelihood of success.
3. The applicant on 30th March, 2021, received garnishee order
nisi issued vide Miscellaneous Application No. 392 of 2021
10 wherein all the applicant’s bank accounts in Stanbic Bank were
attached.
4. The garnishee nisi order in Miscellaneous Application No. 392
of 2021 was made absolute.
5. The applicant has been served with other two garnishee nisi
15 orders against Uganda National Roads Authority and Guarantee
Trust Bank (U) Limited.
6. The applicant filed applications for stay of execution and setting
aside the garnishee proceedings in the High Court vide
Miscellaneous Applications No. 467 of 2021 and 481 of 2021.
20 7. The applicant’s applications for stay of execution were
dismissed by the trial Judge.
8. The applicant’s appeal will be rendered nugatory if the
respondent executes the decree in Civil Suit No. 721 of 2020
before the determination of the Applicant’s Appeal.
25 9. The applicant will suffer irreparable loss and/or damage if the
execution of the said decree is not stayed and the garnishee

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 proceedings are not set aside pending the determination of the
applicants appeal.

10. The application has been made without any unreasonable

delay.
5 11. It is in the interest of justice that the execution of the
decree in Civil Suit No. 721 of 2020 be stayed pending the
hearing and determination of the applicant’s appeal.

The respondent filed an affidavit in reply sworn by the respondent,

Justus Kyabahwa, and stated that the Garnishee Order nisi issued
10 in Misc. Application No. 392 of 2021 has since been made absolute
and the funds duly transferred to the respondent’s account. The
respondent stated further that the Garnishee Order nisi issued
against the respondent in Miscellaneous Application No. 451 of 2021
has since been made absolute and execution is complete.

15 Background

The respondent entered into a contract with the applicant to provide

consultancy services for bid preparation, presentation and tender
winning, for the construction of Rukungiri-Kihihi-Ishasha/Kanungu
road in Uganda measuring about 78.5 kilometers. The project was to
20 be co-funded by the Africa Development Bank and the government of
Uganda. The applicant won the project in 2018 and on 16/09/2018
signed the contract for the construction of the said road with Uganda
National Roads Authority (hereinafter referred to as UNRA).
According to the contract, the total agreed consideration was 4% of
25 the contract price being UGX 207,834,634,080/=. The applicant

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 received advance from UNRA but did not notify the respondent. The
respondent notified the applicant and the parties executed a deed of
variation which was founded on fraudulent misrepresentation by the
applicant. The respondent sued the applicant in the High Court for
5 breach of the consultancy agreement, a declaration that the deed of
variation was void ab initio, payment of USD 900,000 and general
damages. Judgment was entered in favour of the Justus Kyabahwa,
the respondent.

Representation

lo At the hearing of the application, Learned Counsel Mr. Laston

Gulume and Learned Counsel Mr. Solomon Sadam appeared for the
applicant while Learned Counsel Mr. Ahmed Kalule Mukasa and
Learned Counsel Mr. Mugisha Achileo appeared for the respondent.

When this application was called for hearing, we realized that Civil
15 Application No. 129 of 2021 Uganda National Roads Authority Vs
China Henan International Cooperation Group Company Limited and
Justus Kyabahwa, had been filed for clarification on whether the
interim order extracted on the 22nd of April, 2021 stopping any
payments arising out of the Decree issued in High Court Civil suit
20 No. 721 of 2021, stayed the orders Absolute issued against the
Applicant, has similar subject matter with the current application.
The main application for stay of execution had come for hearing and
it was not necessary to consider the application concerning an
interim order issued pending hearing and determination of the main
25 application. We have decided to determine the main application for

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 stay of execution. UNRA was unrepresented at the hearing of this
application but they filed submissions.

Applicant’s arguments

5 It was submitted for the applicant that this application meets all the
requisite requirements to grant an order for stay of execution.
Counsel argued that the appeal in Civil Appeal No. 152 of 2021 has
a high likelihood of success. That the case before the trial court
related to a consultancy agreement of 30th October 2015 to which the
10 parties executed a variation dated 14th January 2019. The later
agreement varied the consideration in the consultancy agreement by
USD 900,000 which both parties signed. The respondent instituted
a suit to recover the varied amount of USD 900,000. The trial Judge
granted the USD 900,000 and in addition granted USD 450,000 as
15 general damages for breach of contract. The applicant filed a Notice
of Appeal in this court.

Counsel for the applicant submitted further that the applicant is

likely to suffer irreparable damage to its business and contractual
works for the government projects being executed if the stay is not
20 granted. Further, that the applicant’s appeal will be rendered
nugatory with the disruption and frustration of its effective
performance of the road construction contract with UNRA for
Rukungiri-Kihihi-Ishasha/Kanungu road.

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 Counsel argued that the applicant seeks to stay further execution of
the decree arising from Civil Suit No. 721 of 2020 which has only
been partly executed. No payment has been made by UNRA against
the applicant’s performance certificate. Counsel relied on the case of
5 DFCU Bank Ltd Vs Dr. Anna Persis Nakate, Civil Application No.
29 of 2003, and Wilson v. Church (1879) 12 Ch. D. 454 in which
this court held that; it is the paramount duty of a court to which an
application for stay of execution pending an appeal is made to see
that the appeal, if successful, is not rendered nugatory.

0 Respondent’s arguments

For the respondent, counsel submitted that the conditions for an

applicant to fulfil before granting an order of stay of execution are
that; the intended appeal has a likelihood of success, the applicant
will suffer irreparable damage that cannot be compensated by an
15 award of damages and render the appeal nugatory, balance of
convenience and the court must establish that the application was
instituted without unreasonable delay. Counsel submitted that the
applicant has not demonstrated a likelihood of success of the
intended appeal. Counsel relied on the Supreme Court decision in
20 Dr. Muhammed Ahmed Kisuule Vs Greenland Bank Limited SCCA
No. 07 of 2010 in which an application for stay of execution was
refused because the applicant failed to prove that there was a
likelihood of success.

Counsel submitted further that irreparable harm should only be that

25 which cannot be compensated in damages. The applicant has not

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 demonstrated that there will be irreparable loss incurred if this
application for stay of execution is not granted. The issue at hand is
the enforcement of a purely monetary claim and there is no special
quality attached to such a claim to cause irreparable loss. The
5 respondent further argued that out of the decretal sum of
1,485,000/=, 1,066,000 USD has already been recovered by making
the garnishee orders absolute against Stanbic Bank and UNRA.

Consideration of the application.

The law governing applications for stay of execution in this court is

10 basically rule 6(2) (b) of the Rules of this court which provides:

Subject to sub-rule (1) of this rule, the institution of an appeal

shall not operate to suspend. any sentence or to
stay of execution but the court may-
15

(b) in any civil proceedings where a notice of appeal has been

lodged in accordance with rule 76 of these Rules, order a stay of
execution, an injunction or stay of proceedings as the court
considers just.”

20 For an application in this court for a stay of execution to succeed, the

applicant must first show that he/she has lodged a notice of appeal
m accordance with rule 72 of the Rules of this court. The other facts
to which lodgment of the notice of appeal is subject, vary from case
to case but include the fact that the applicant will suffer irreparable
25 loss if a stay is not granted; that the applicant’s appeal has a high

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 likelihood of success. The most often cited authority in an application
of this kind is Lawrence Musiitwa Kyazze vs Eunice Busingye,
Civil Application No. 18 of 1990, in which the Supreme Court held
that;
5 “Parties asking for a stay should meet conditions like:
(1) That substantial loss may result to the applicant unless the
order is made.

(2) That the application has been made without unreasonable

delay.

10 (3) That the applicant has given security for due performance of
the decree or order as may ultimately be binding upon him.

In a more recent decision of Hon. Theodore Ssekikubo & Others vs.

The Attorney General and Another, Constitutional Application
No 06 of 2013 the Supreme Court re-stated the principles to
15 consider before granting an order of stay of execution pending Appeal
and these include;

1. It must be established that the applicant will suffer irreparable

damage or that the appeal will be rendered nugatory if a stay is
not granted.

20 2. The application must establish that the appeal has a likelihood

of success; or a prima facie case of his right to appeal.
3. If 1 and 2 above has not been established, Court must consider
where the balance of convenience lies.
4. That the applicant must also establish that the application was
25 instituted without delay.

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 The issue for determination by the Court is whether the applicant
has adduced sufficient reasons to justify the grant of a stay of
execution.

At the hearing of this application, the Applicant had not yet filed a
5 record of appeal. As such, the issue of probability of success could
not be ascertained by the Court. In our view, although the Court at
this stage is not required to delve into the merits of the intended
appeal, it is not sufficient for the Applicant to vaguely state that its
appeal has a likelihood of success without demonstrating the
,o evidential foundation for such an assertion. That evidential
foundation would have to be contained in the record of appeal and
without it, it is difficult for the Court to reach the conclusion that the
intended appeal has a likelihood of success. Clearly, the Applicant
must demonstrate that the points proposed to be taken on appeal are
15 not frivolous or vexatious. See Gashumba Maniraguha Vs Sam
Nkudiye SCCA No. 24 of 2015. In determining whether the said
questions are frivolous or vexatious, the Court would have to examine
the record of appeal which was not filed.

Consequently, it is our considered view that this application fails, for

20 failure to meet the first condition to be considered in an application
for stay of execution. See the case of Dr. Muhammed Ahmed Kisuule
=Vs= Greenland Bank Limited [in Liquidation] SCCA No. 07 of
2010, where the Supreme Court dismissed an application for stay of
execution because the Applicant failed to prove that he was likely to
25 succeed on appeal. Furthermore, this Court in Horizon Coaches

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 Limited Vs Mbarara Municipal Council and others CACA No. 07
of 2014, refused to grant an order of interim injunction because the
applicant had no likelihood of success in the main application and
petition.

5 For the respondent, it is argued that execution has already been

completed after the Garnishee order nisi in Misc. Application No. 392
of 2021 and Miscellaneous Application No. 451 of 2021 were made
absolute and the funds duly transferred to the respondent’s account.

Lord Denning M.R. considered the procedure for attachment of debts

10 in the case of Choice Investments Ltd vs. Jeromnimon (Midland
Bank Ltd, Garnishee) [1981] 1 All ER 225 at page 227 where he
said:

“The word 'garnishee’ is derived from the Norman-French. It

denotes one who is required to ‘garnish’, that is, to furnish, a
15 creditor with the money to pay off a debt. A simple instance will
suffice. A creditor is owed £100 by a debtor. The debtor does not
pay. The creditor gets judgment against him for the £100. Still
the debtor does not pay. The creditor then discovers that the
debtor is a customer of a bank and has £150 at his bank. The
20 creditor can get a ‘garnishee’ order against the bank by which
the bank is required to pay into court or direct to the creditor, out
of its customer’s £150, the £100 which he owes to the creditor.

There are two steps in the process. The first is a garnishee order
nisi. Nisi is Norman-French. It means ‘unless’. It is an order on
25 the bank to pay the £100 to the judgment creditor or into court

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 within a stated time unless there is some sufficient reason why
the bank should not do so. Such reason may exist if the bank
disputes its indebtedness to the customer for one reason or other.
Or ifpayment to this creditor might be unfair by preferring him to
5 other creditors: see Pritchard v Westminster Bank. Ltd [1969]
1 All ER 999, [1969] 1 WLR 547 and Rainbow v Moorgate

Properties Ltd [1975] 2 AU ER 821, [1975] 1 WLR 788. If no

sufficient reason appears, the garnishee order is made absolute,

to pay to the judgment creditor, or into court, whichever is the
10 more appropriate. On making the payment, the bank gets a good
discharge from its indebtedness to its own customer, just as if he
himself directed the bank to pay it. If it is a deposit on seven
days’ notice, the order nisi operates as the notice.

As soon as the garnishee order nisi is served on the bank, it

15 operates as an injunction. It prevents the bank from paying the
money to its customer until the garnishee order is made absolute,
or is discharged, as the case may be. It binds the debt in the
hands of the garnishee, that is, creates a charge in favour of the
judgment creditor: see Joachimson v Swiss Bank Corpn
20 [1921] 3 KB 110 at 131, [1921] All ER Rep 92 at 102, per

Atkin LJ. The money at the bank is then said to be 'attached’,

again derived from Norman-French. But the ‘attachment’ is not

an order to pay. It only freezes the sum in the hands of the bank
until the order is made absolute or is discharged. It is only when
25 the order is made absolute that the bank is liable to pay. ”

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 In the instant case, the Garnishee Order Nisi in Misc. Application No.
392 of 2021 and Miscellaneous Application No. 451 of 2021 were
made absolute thereby operating as an order to pay the debt to the
judgment creditor. It is our considered view that an order of stay of
5 execution would be made in futility.

The interim order made by Hon. Justice Christopher Madrama in

Civil Application No. 101 of 2021 granted an interim stay of further
execution of the decree in High Court Civil Suit No. 721 of 2021. He
noted that an Order Absolute cannot be stayed but rather set aside.
j By the time Hon. Justice Christopher Madrama made the interim
order, the Garnishee Order nisi in Miscellaneous Application No. 451
of 2021 had been made absolute. Once a garnishee order nisi is made
absolute, the execution process is complete. The issuing court is the
one to set it aside not through a decision in application to stay
15 execution.

Hon. Justice Christopher Madrama held while ruling on the interim

application that:

“The execution process is complete by making the

garnishee order nisi absolute. Thereafter the court has no farther
20 business because it has directed the money to be paid to the
judgment creditor. In the circumstances, the order can only be set
aside because it would be setting aside an order directing money
that is in the hands of the garnishee to be paid to the judgment
creditor. That order cannot be stayed. It can only be reversed or
25 set aside.”

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 The use of the words 'staying any further execution of the decree
thereby stopping any further payments not yet executed” could not
and did not refer to the orders absolute against the applicant because
Hon. Justice Madrama had already held that that order was not
5 capable of being stayed. As rightly submitted by learned counsel for
the second respondent, those words obviously referred to any other
execution or order which was capable of being stayed and clearly, the
order in Miscellaneous Application No. 451 of 2021 could only be set
aside. From the foregoing, we find that the applicant has failed to
io prove the elements that warrant grant of an order of stay of execution.

This application lacks merit and is accordingly dismissed with costs.

We so order.

Dated this (0 2021

15

Hon. Mr. Justice Cheborion Barishaki, JA

20

Hon. Mr. Justice Stephen Musota, JA

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Hon. Mr. Justice Christopher Madrama, JA

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