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Goodman Agencies Ltd v Hasa Agencies Ltd (Civil Application 1 of 2011)

Supreme Court · [2011] UGSC 22 · 2011 Application Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Application by notice of motion for further security for costs and past costs in a pending constitutional appeal
Decision
Application for further security for costs and past costs dismissed; costs to abide the outcome of the pending appeal

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Holding

The applicant sought further security for costs and past costs against the respondent, a foreign company prosecuting a pending constitutional appeal. Okello JSC held that although there was credible evidence under section 404 of the Companies Act and rule 101(3) giving reason to believe the respondent might be unable to pay costs, the court's discretion to order security is unfettered and may be refused where the respondent's appeal has reasonable prospects of success. The applicant bore the burden of showing the appeal had no reasonable prospect of success and failed to do so. Ordering security against a party with a potentially meritorious appeal would amount to a denial of justice. The application was dismissed.

Facts

The applicant and the respondent had jointly sued the Attorney General in the High Court. The respondent was struck off as a party, and the applicant later reached a settlement with the Attorney General, recorded in a sealed consent judgment. The High Court subsequently re-joined the respondent and allotted it a portion of the settlement. The applicant petitioned the Constitutional Court, which allowed the petition with costs against the respondent and the Attorney General. The respondent appealed to the Supreme Court (Constitutional Appeal No. 5 of 2010), which remained pending. While the appeal was pending, the applicant filed bills of costs and applied for further security for costs and past costs, asserting the respondent was a foreign company with no known address, assets or financial returns in Uganda and Kenya. The respondent contended that its appeal had high prospects of success and that high costs should not be used to stifle it.

Issues

  1. Whether the applicant discharged the burden of showing sufficient cause to justify an order for further security for costs and past costs against the respondent.
  2. Whether there was credible evidence that the respondent, a foreign limited company, would be unable to pay the applicant's costs if the respondent's appeal failed.
  3. Whether the respondent's pending appeal had no reasonable prospect of success such that an order for security for costs should be made.

Orders

  • The application is dismissed.
  • Costs of the application to abide the outcome of the appeal.

Key headnotes

Civil Procedure — Security for Costs — Burden of Proof on Applicant
On an application for further security for costs under rule 101(3) of the Rules of the Supreme Court, the burden lies on the applicant to show cause why the order should be granted; merely averring that existing security is inadequate or that past costs remain unpaid imposes no obligation on the court to grant the application.
Company Law — Security for Costs — Companies Act s.404 — Limited Company's Inability to Pay
Under section 404 of the Companies Act, where a limited company is a litigant and credible testimony gives reason to believe it will be unable to pay the opposing party's costs if that party succeeds, the court may require sufficient security for those costs and stay proceedings until it is given.
Civil Procedure — Security for Costs — Discretion — Prospects of Success of the Appeal
The discretion to order security for costs is unfettered; even where a litigant is unable to pay costs, the court may refuse security where the opposing party's claim or appeal has a strong prima facie prospect of success, because ordering security against a party likely to succeed would amount to a denial of justice.
Civil Procedure — Affidavit Evidence — Failure to Controvert as Admission
A party's failure to respond, by affidavit or submission, to averments made against it may be construed as an admission of those averments.

Legislation cited (5)

  • Rules of the Supreme Court rule 101(1) & (3)
  • Companies Act (Cap. 110) s.404
  • Companies Act of England s.447
  • Constitution of Uganda art.26
  • Constitution of Uganda art.28

Cases cited (6)

  • G.M. Combined (U) Ltd v A.K. Detergents (U) Ltd (Civil Appeal No. 34 of 1995)
  • Noble Builders (U) Ltd & Anor v Jabal Singh Sandhu (Civil Appeal No. 15 of 2002)
  • Lalji Gangji v Nathod Vasanjee [1960] EA 315
  • Patel v American Express International Banking Corporation (Civil Appeal No. 9 of 1989)
  • Bank of Uganda v Joseph Nsereko & 2 Others (Civil Application No. 7 of 2002)
  • Sir Lindsay Parkinson & Co. Ltd v Triplan [1973] 1 QB 609
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.