Wakilii

Diamond Trust Bank Uganda Limited & Another v Ham Enterprises Limited & 2 Others (Miscellaneous Application No. 846 of 2020)

High Court · [2020] UGHC 119 · 2020 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for stay of execution of a High Court decree pending appeal to the Court of Appeal
Decision
Stay of execution granted pending appeal

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court granted the application for stay of execution pending appeal. The court found that the applicants had lodged a notice of appeal raising arguable grounds with a likelihood of success, including questions about whether the sums awarded were liquidated, whether the trial judge correctly applied the law on illegality, and whether syndicated loans are illegal. The court held that substantial loss would result if the stay was not granted, particularly given the self-executing nature of the orders for discharge of mortgages. The court declined to order security for due performance, finding that the applicants were sufficiently liquid to meet obligations if the appeal failed.

Outcome

Stay of execution granted pending appeal

Facts

The respondents sued the applicant banks for breach of contract, alleging unlawful deductions from their loan accounts. The respondents later amended their plaint to claim that the second applicant (Diamond Trust Bank Kenya Limited) conducted illegal business in Uganda without a licence from Bank of Uganda, and that the first applicant facilitated this illegality. The trial judge struck out the applicants' defence as founded on illegality and entered judgment for the respondents, ordering the banks to pay UGX 34,295,951,553 and USD 23,467,670.61, and to discharge mortgages over the respondents' properties. The trial judge declared syndicated loans illegal and vacated an earlier order appointing auditors to reconcile the loan accounts. The applicants filed a notice of appeal and sought a stay of execution pending the appeal.

Issues

  1. Whether the applicants satisfied the conditions for a stay of execution pending appeal.
  2. Whether the applicants' appeal has a high likelihood of success.
  3. Whether the applicants would suffer substantial loss if the stay is not granted.
  4. Whether the application was made without unreasonable delay.
  5. Whether security for due performance of the decree should be required.

Orders

  • Application for stay of execution allowed.
  • Execution of the decree in High Court Civil Suit No. 43 of 2020 stayed pending hearing and determination of the applicants' appeal in the Court of Appeal.
  • Costs to abide by the results of the appeal.

Rules and key headnotes

Stay of Execution — Principles for Grant — Likelihood of Success of Appeal
For an application for stay of execution to succeed, the applicant must show that a notice of appeal has been lodged and that the appeal is not frivolous and has a likelihood of success, though it is not practical to expect a judge who decided a matter to find fault in the same decision.
Stay of Execution — Liquidated Sums — Requirement for Formal Proof
Where a defence is struck out, the suit must proceed for formal proof as if a defence exists, save where the sum claimed is a liquidated sum. Where parties have agreed to an audit to ascertain amounts, this raises an arguable question whether the sum is truly liquidated and can be awarded without formal proof.
Illegality — Application of Contract Act 2010 — Exceptions to Ex Dolo Malo Rule
The Contract Act 2010 section 19(2) modifies the common law position on illegal contracts by providing exceptions where a party may recover under an illegal agreement, including where the plaintiff was ignorant of the illegality, where consent was induced by fraud or undue influence, or where the law protects a particular class of persons of which the plaintiff is one.
Stay of Execution — Self-Executing Orders — Threat of Execution
Orders for discharge of mortgages are self-executing in nature, as they can be extracted and served on the Registrar of Titles without further application, presenting a risk that titles may be transferred and defeat the security of the judgment debtor. This constitutes a serious threat of execution justifying a stay.
Stay of Execution — Security for Due Performance — Discretion of Court
Security for due performance is not a condition precedent for granting a stay of execution. The objective of legal provisions on security was never intended to fetter the right of appeal but to ensure courts do not assist litigants to delay execution through vexatious and frivolous appeals. The decision whether to order security must be made according to the circumstances of each case and in consonance with the probability of success of the appeal.
Syndicated Loans — Licensing Requirements — Foreign Banks
Whether foreign banks that are not trading in Uganda are required to obtain a licence from Bank of Uganda to execute a contract, and whether syndicated loans constitute illegal financial institution business, are questions of law with far-reaching implications for the banking industry that warrant maintenance of the status quo pending appellate determination.
Extraction of Decrees and Orders — Procedure — Approval by Parties
Under Order 21 Rule 7(2) and (4) of the Civil Procedure Rules, it is the duty of the successful party to prepare a draft decree and submit it for approval of the other parties, who shall approve it with or without amendments or reject it. If the parties do not agree, the decree shall be settled by the judge who pronounced the judgment, and parties are entitled to be heard on the terms of the decree.

Legislation cited (13)

  • Civil Procedure Act s.98
  • Judicature Act s.33
  • Civil Procedure Rules Or.43 R.4(2)
  • Civil Procedure Rules Or.43 R.4(3)
  • Civil Procedure Rules Or.52 R.1
  • Civil Procedure Rules Or.9 R.6
  • Civil Procedure Rules Or.9 R.8
  • Civil Procedure Rules Or.9 R.10
  • Civil Procedure Rules Or.9 R.30
  • Civil Procedure Rules Or.21 R.7(2)
  • Civil Procedure Rules Or.21 R.7(4)
  • Contract Act 2010 s.19(2)
  • Financial Institutions Act 2004

Cases cited (7)

  • Lawrence Musiitwa Kyazze v Eunice Businge (Supreme Court Civil Application No. 18 of 1990)
  • Hon Theodore Ssekikubo and Others v Attorney General and Others (Constitutional Application No. 03 of 2014)
  • Kyambogo University v Prof. Isaiah Omolo Ndiege (Court of Appeal No. 341 of 2013)
  • Dr. Ahmed Muhammed Kisuule v Greenland Bank (In liquidation) (Miscellaneous Application No. 7 of 2010)
  • Kulubya v Sigh [1964] AC 142
  • John Baptist Kawanga v Namyalo (Miscellaneous Application No. 12 of 2017)
  • Margrette Kato v Nalwo (Civil Miscellaneous Application No. 11 of 2011)

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Diamond Trust Bank Uganda Limited & Another v Ham Enterprises Limited & 2 Others (Miscellaneous Application No. 846 of 2020) [2020] UGHC 119 (2 November 2020)
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.