Formula Feeds and Others v KCB (U) LTD (Civil Reference 41 of 2021)

Supreme Court · [2022] UGSC 39 · 2022 Reference Partly Allowed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

Civil reference to a full panel of the Supreme Court from the ruling of a single Justice on an application for security for costs.

Decision

Reference succeeds in part: the UGX 200,000,000 ordered as security for past costs was set aside as excessive, while UGX 100,000,000 security for costs and UGX 71,726,801 balance must be paid within 45 days before the appeal is heard.

The full judgment

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Holding

On a reference from a single Justice's ruling ordering security for costs, the Supreme Court held that an admitted failure to pay previously taxed costs is a strong additional ground for ordering security. It upheld UGX 100,000,000 as security for costs in the appeal but set aside UGX 200,000,000 ordered for past costs as excessive, the relevant Court of Appeal figure having been set aside. A 45-day deposit timeline was reasonable on the authorities. However, it was premature to order that the appeal stand dismissed on default before that timeline expired; proper procedure requires awaiting expiry then a dismissal application. The appeal's prospects of success were not properly before the single Justice. The reference succeeded in part.

Facts

The applicants, Kenyan nationals, obtained credit facilities from the respondent bank in 2011 and defaulted. The High Court entered judgment for Shs 4,272,740,118 with interest at 21% per annum from 10 February 2016. Costs were taxed at Shs 71,726,801, of which Shs 30,000,000 had been paid. On appeal the High Court decision was upheld and Court of Appeal costs were taxed at Shs 695,650,700, but that figure was subsequently set aside pending taxation inter partes. The applicants filed Civil Appeal No. 13 of 2020 in the Supreme Court, which is pending. The bank applied for security for costs before a single Justice, who ordered Shs 100,000,000 as further security for costs and Shs 200,000,000 as security for past costs to be deposited within 45 days, failing which the appeal would stand dismissed. The applicants referred that ruling to the full panel.

Issues

Whether the single Justice erred in ordering security for costs and whether the sums ordered as further security and as security for past costs were excessive.
Whether the forty-five day timeline within which to deposit the security for costs was unreasonable.
Whether the court could, of its own motion, order that the appeal stand dismissed on default of payment when that relief was not sought.
Whether the single Justice failed to address herself to the authorities and submissions presented at the hearing.
Whether the single Justice erred in holding that the pending appeal had no reasonable prospect of success.

Orders

Security for costs of Shs 100,000,000 must be paid before the hearing of the appeal at the Supreme Court.
The balance of the security for costs taxed and confirmed by the Court of Appeal of Shs 71,726,801 must be paid before the hearing of the appeal at the Supreme Court.
The security for costs in orders 1 and 2 must be paid within forty-five (45) days of this ruling.
Costs will abide the outcome of the final appeal.

Key headnotes

Civil Procedure — Security for Costs — Effect of admitted failure to pay taxed costs

Where an applicant admits failure to pay previously taxed costs, that admission presents an additional and strong reason for ordering payment of security for costs, over and above mere inability to pay.

Civil Procedure — Security for Costs — Excessiveness of award for past costs

An order for security for payment of past costs is excessive and unwarranted where the costs figure relied upon has been set aside and part of the taxed costs has already been paid.

Civil Procedure — Security for Costs — Reasonableness of deposit timeline

A timeline of forty-five days within which to deposit security for costs is not unreasonable, being consistent with timelines fixed in comparable authorities.

Civil Procedure — Dismissal of appeal for default — Proper procedure

A court should not order that an appeal stand dismissed upon default of payment of security for costs before the prescribed timeline has expired; proper procedure requires awaiting expiry of the timeline and then determining, on an appropriate application, whether to dismiss.

Civil Procedure — Security for Costs — Scope of inquiry into prospects of success

Whether a pending appeal has reasonable prospects of success is not a proper subject for determination at the security-for-costs stage where the question was not canvassed by the parties.

Legislation cited (2)

Judicature (Supreme Court Rules) Directions r.52(2)
Judicature (Supreme Court Rules) Directions r.101(3)

Cases cited (9)

Noble Builders (U) Ltd & Anor v Jabal Singh Sandhu (Civil Appeal No. 15 of 2002)
Bank of Uganda v Joseph Nsereko & 2 Ors (Civil Appeal No. 7 of 2002)
Fang Min v Belex Tours and Travel (Civil Appeal No. 6 of 2013)
Crane Bank v Belex Tours and Travel Ltd (Civil Appeal No. 1 of 2014)
Charles Onyango Obbo and Anor v Attorney General (Civil Appeal No. 2 of 2002)
Deepak K. Shah & 3 Ors v Manurama Ltd and 2 Ors (HCMA No. 361 of 2001)
NIC v Pelican Services Ltd (Civil Reference No. 76 of 2016)
Goodman Agencies v Hassa Agencies (Civil Reference No. 1 of 2011)
Mulindwa George William v Kisubika Joseph (Civil Appeal No. 12 of 2014)

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