Goodman Agencies Limited v Hass (k) Limited (Civil Application 1 of 2011)

Supreme Court · [2011] UGSC 31 · 2011 Application Dismissed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

Application by notice of motion for an order that the respondent furnish further security for costs and past costs in a pending constitutional appeal

Decision

Application for further security for costs dismissed; costs to abide the outcome of the pending Constitutional Appeal No. 05 of 2010

The full judgment

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Holding

On an application under section 404 of the Companies Act and rule 101(3) of the Supreme Court Rules, the court held that the applicant for further security for costs bears the burden of showing that the circumstances justify the order. Although there was credible evidence, including the respondent's unanswered failure to disclose any address, assets, or financial returns, giving reason to believe the respondent might be unable to pay costs, that factor alone was insufficient. The applicant failed to establish that the respondent's appeal had no reasonable prospect of success. As ordering security would deny justice to a party whose appeal was not shown to be hopeless, the application was dismissed.

Facts

The applicant and the respondent had filed a High Court civil suit against the Attorney General. The respondent was struck off as a party, after which the applicant reached a settlement with the Attorney General that was entered as a consent judgment. The High Court later re-joined the respondent to the consent judgment and allotted it a portion of the settlement. The applicant petitioned the Constitutional Court, which allowed the petition. Dissatisfied, the respondent filed Constitutional Appeal No. 05 of 2010 in the Supreme Court, still pending. While that appeal was pending, the applicant brought this application seeking an order that the respondent, a limited liability company, furnish further security for costs and past costs, contending that the respondent was a foreign company with no known address, assets, or financial returns in Uganda and Kenya, and that its appeal had no reasonable prospect of success.

Issues

Whether the applicant made out a case for an order requiring the respondent to furnish further security for costs and past costs.
Whether there was credible evidence giving reason to believe the respondent would be unable to pay the applicant's costs if the applicant succeeded in defending the appeal.
Whether the respondent's pending appeal had no reasonable prospect of success such that security for costs should be ordered.

Orders

The application for further security for costs and past costs is dismissed.
Costs of the application to abide the outcome of the appeal.

Key headnotes

Security for Costs — Burden of Proof on the Applicant

An applicant for an order for further security for costs bears the burden of satisfying the court that the circumstances of the case justify making the order, and cannot impose an obligation on the court merely by averring that existing security is inadequate or that costs awarded below remain unpaid.

Security for Costs — Inability of Company to Pay (Companies Act s.404)

Where a limited company is plaintiff and credible evidence gives reason to believe it will be unable to pay the defendant's costs if the defendant succeeds in its defence, the court may require sufficient security; an unanswered averment that the company has no known address, assets, or financial returns may be construed as an admission supporting that belief.

Security for Costs — Width of Judicial Discretion

The discretion conferred by rule 101(3) of the Supreme Court Rules to order further security for costs is very wide and is fettered only by the requirement, applicable to all judicial discretion, that it be exercised judicially.

Security for Costs — Prospect of Success and Denial of Justice

Even where a company may be unable to pay costs, the court may refuse to order security where doing so would deny justice; the onus is on the applicant to show that the respondent's appeal has no reasonable prospect of success, and security will be refused against a party whose appeal is not shown to be hopeless.

Legislation cited (5)

Companies Act (Cap. 110) s.404
Rules of the Supreme Court rule 101(1)
Rules of the Supreme Court rule 101(3)
Constitution of Uganda article 26(2)
Constitution of Uganda article 28(1)

Cases cited (6)

Lali Gangji - vs - Nathoo Vasanjee (1961) EA 315
Patel v American Express International Banking Corporation (Civil Appeal No. 9 of 1989)
Bank of Uganda v Joseph Nsereko and 2 Others (Civil Application No. 07 of 2002)
G. M. Combined (U) Ltd - vs - A. K. Detergent (U) Ltd, Supreme Court Civil Appeal No. 34 of 19[?]
Noble Builders (U) Ltd And Anor - vs - Jabal Singh Sandhu, Civil Appeal No. 1[?] of 2002
Sir Lindsay Parkinson & Co. Ltd - vs - 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.