Wakilii

G.M. Combined (U) Ltd and Others v A.K. Detergents Ltd and Others (Civil Application No. 9 of 1998)

Supreme Court · [1998] UGSC 36 · 1998 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application before a single justice of the Supreme Court for further security for costs and security for past costs (consolidating Civil Applications Nos. 5, 6 and 9 of 1998), arising in Civil Appeal No. 7 of 1998.
Decision
Application granted; respondent ordered to deposit UGX 50,000,000 as further security for costs for each applicant before Civil Appeal No. 7 of 1998 is heard.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

On the creditor-applicants' application for further security for costs against the respondent company in receivership, the single justice rejected the preliminary objection, holding that a single justice may hear and determine such an application at any time under Rule 100(3) of the Rules of the Supreme Court and need not disqualify himself for sitting on the appeal panel. Filing written submissions did not close the appeal. The application was properly brought under Rule 100(3); section 404 of the Companies Act was not the exclusive provision and itself permits security where a limited company may be unable to pay costs. Fraud not being proved, the court granted further security of UGX 50,000,000 per applicant, to be deposited before the appeal is heard.

Outcome

Application granted; respondent ordered to deposit UGX 50,000,000 as further security for costs for each applicant before Civil Appeal No. 7 of 1998 is heard.

Facts

The respondent company borrowed money from the applicants — A.K. Detergents Ltd and the financing creditors — under loans secured by debentures. When the respondent defaulted, the creditors exercised their powers under the debentures and appointed receivers, who sold the respondent's assets, including its land, to A.K. Detergents Ltd. The respondent sued in the High Court contending the sale was ineffectual and obtained judgment in its favour; the other applicants were enjoined to the suit by order of court. The applicants successfully appealed to the Court of Appeal, which awarded them costs in the High Court and Court of Appeal that remained untaxed. The respondent then appealed to the Supreme Court in Civil Appeal No. 7 of 1998. The respondent, being in receivership, had already furnished some security. The applicants, contending the existing security was inadequate to cover accrued and prospective costs and that the insolvent respondent might be unable to pay if the appeal failed, applied for further security for costs.

Issues

  1. Whether a single justice of the Supreme Court could hear and determine the application, or whether it had to be heard by a full bench.
  2. Whether a single justice sitting on the panel for the main appeal ought to disqualify himself from hearing the application for possible bias.
  3. Whether the application came too late, the parties having already filed written submissions in the appeal.
  4. Whether the application was governed by Rule 100(3) of the Rules of the Supreme Court or exclusively by section 404 of the Companies Act.
  5. Whether the applicants were entitled to an order for further security for costs against the respondent company in receivership.

Orders

  • Preliminary objection rejected.
  • Application for further security for costs allowed.
  • Respondent ordered to pay further security for costs in the sum of UGX 50,000,000 for each applicant.
  • The said security to be deposited in court before Civil Appeal No. 7 of 1998 can be heard.

Rules and key headnotes

Security for Costs — Jurisdiction of Single Justice
A single justice of the Supreme Court may, under Rule 100(3) of the Rules of the Supreme Court, hear and determine an application for further security for costs at any time during the proceedings.
Security for Costs — Disqualification and Bias
A single justice who happens to be on the panel for a subsequent hearing in the same case is not required to disqualify himself from hearing an interlocutory application on the ground of possible bias.
Security for Costs — Timing of Application
The filing of written submissions in an appeal does not close the proceedings; an application for further security for costs may be heard and determined at any time before judgment.
Security for Costs — Companies Act s.404
Security for costs against a company may be ordered under Rule 100(3) of the Rules of the Supreme Court; section 404 of the Companies Act is not the exclusive provision and itself permits an order for security where there is reason to believe a limited company will be unable to pay costs.
Receivership — Ownership of Assets
Once receivers are appointed in insolvency proceedings, ownership and control of the insolvent's property passes to the receivers, and a sale made by them remains valid until nullified by the court; the receivers' duty to act diligently and lawfully does not affect that ownership or control.
Security for Costs — Insolvent Respondent
Further security for costs may be ordered against a company in receivership where there is a reasonable basis to believe it may be unable to meet the costs of an appeal if unsuccessful.

Legislation cited (5)

  • Rules of the Supreme Court r.100(3)
  • Rules of the Supreme Court r.49(1)(a)
  • Rules of the Supreme Court r.93(4)
  • Companies Act (Cap. 85) s.404
  • East African Court of Appeal Rules r.60

Cases cited (15)

  • G.M. Combined (U) Ltd v A.K. Detergents (U) Ltd (Civil Appeal No. 34 of 1995)
  • G.M. Combined (U) Ltd v A.K. Detergents (U) Ltd (Civil Appeal No. 14 of 1995)
  • Uganda Commercial Bank v Multi Constructors Ltd (Civil Appeal No. 29 of 1994)
  • Mawogola Farmers and Growers Ltd v Kayanja (1971) EA 108
  • Premchand v. Quarry Services ltd, (1971) E.A 1972
  • Kaura v Morgan (1961) EA 462
  • Mohammad Abdalla v Patel (1963) EA 447
  • Namboro v Kaala [1975] HCB 315
  • Kampala Bottlers Ltd v Uganda Bottlers Ltd (Civil Appeal No. 16 of 1996)
  • Lalji Gangji v Nathoo Vasanjee (1960) EA 315
  • Sangi v. Nathos (i960)E. A. 315
  • Pooley's Trustees v Whetham (1886) 33 Ch D 76
  • Acor v.K. Ltd, (1997) 3 ALL. ER.377
  • Atulkumar Sumantbhai Patel v American Express International Banking Corporation (Civil Appeal No. 9 of 1989)
  • Official Receiver and Liquidator of Sepal Ltd v Narandas Nanji Chandrani (1961) EA 107

Full judgment

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G.M. Combined (U) Ltd and Others v A.K. Detergents Ltd and Others (Civil Application No. 9 of 1998) [1998] UGSC 36 (30 November 1998)
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.