Wakilii

Mbuga v Raw Gold FZ-LLC (Miscellaneous Application 406 of 2024)

High Court · [2024] UGCOMMC 221 · 2024 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for security for costs arising from Civil Suit No. 128 of 2024
Decision
Application for security for costs dismissed; main suit to proceed to trial

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed an application for security for costs brought by the defendant against a foreign plaintiff. The court held that the applicant failed to establish that the respondent's suit was frivolous and vexatious or that the applicant had a good defence likely to succeed. Both parties raised arguable points requiring determination at trial. The applicant failed to provide evidence of the respondent's impecuniosity or inability to satisfy a costs order.

Outcome

Application for security for costs dismissed; main suit to proceed to trial

Facts

The respondent, Raw Gold FZ-LLC, a company incorporated in the United Arab Emirates, sued the applicant for recovery of USD 12,000 and damages for breach of contract relating to a Sale and Purchase Agreement for gold bars dated 21 December 2023. The respondent claimed it paid USD 12,000 as advance payment but the applicant failed to deliver the gold. The applicant contended that the respondent contracted with Traverse Cargo and Mineral Link Limited, not with him as sole proprietor of the business name Traverse Cargo and Mineral Link. The applicant applied for security for costs of USD 10,000, arguing the respondent was a foreign company with no assets in Uganda, the suit was frivolous, and he had a good defence. The Agreement bore the name Traverse Cargo and Mineral Link but was stamped with Traverse Cargo and Mineral Link Limited. The telephone number in the Agreement was used to serve the applicant with the suit papers.

Issues

  1. Whether there are sufficient grounds for the grant of an application for security for costs to the Applicant/Defendant against the Respondent/Plaintiff?

Orders

  • Application dismissed.
  • Costs of the application shall be in the cause.

Rules and key headnotes

Security for Costs — Discretionary Power of Court
The power to grant an application for security for costs under Order 26 rule 1 of the Civil Procedure Rules is discretionary and the court exercises it judiciously only after satisfaction that it deems fit to do so.
Security for Costs — Considerations for Grant
The main considerations in an application for security for costs are whether the applicant is being put to undue expenses by defending a frivolous and vexatious suit, whether the applicant has a good defence to the suit, and whether the applicant is likely to succeed. Only after these factors have been considered may the court consider the plaintiff's ability to pay.
Security for Costs — Foreign Plaintiff — Address for Service
The fact that a plaintiff is a foreign company with no physical address in Uganda does not by itself warrant an order for security for costs where the plaintiff has provided a local advocate's address for service and has not been shown to be impecunious or unable to satisfy a costs order.
Security for Costs — Impecuniosity — Burden of Proof
Poverty of a plaintiff is not by itself a ground for ordering security for costs. The applicant has a duty to prove that there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so. Lack of knowledge on the part of the applicant cannot amount to evidence of the respondent's inability to pay costs.
Security for Costs — Prima Facie Case Assessment
In ascertaining whether the considerations for security for costs have been proved, the court must consider the prima facie case of both parties based on their pleadings, affidavits filed in support of or in opposition to the application, and any other material available at that stage. The court does not conduct a detailed examination of the merits but considers whether either party has a good chance of succeeding on the face of the materials before it.

Legislation cited (7)

Cases cited (14)

  • Anthony Namboro and Another v Henry Kaala [1975] HCB 315
  • Silver Kayondo v Bank of Uganda (Miscellaneous Cause No. 109 of 2022)
  • Makula International v His Eminence Cardinal Nsubuga Wamala [1982] HCB 11
  • G.M. Combined (U) Ltd v A.K Detergent Ltd (Supreme Court Civil Appeal No. 34 of 1995)
  • R v Ajit Singh S/o Vir Singh [1957] EA 822
  • Speke Hotel 1996 Ltd v Sheila Nadege (Miscellaneous Application No. 456 of 2022)
  • Noble Builders (U) Ltd v Jabal Singh Sandhu (Supreme Court Civil Appeal No. 12 of 2004)
  • De Bry v Fitzgerald and Another [1990] 1 All ER 560
  • Peter Katutsi v Sulaiman Mukasa and Sons Limited & Another (Miscellaneous Application No. 268 of 2021)
  • Bukaalamye David and Another v Sensuwa Hanny (Miscellaneous Application No. 3868 of 2023)
  • RO/10224 Retired Lieutenant Ali Nangosha Kundu v Attorney General of Uganda (Miscellaneous Application No. 229 of 2018)
  • Prof. Oloka Onyango & Others v Attorney General (Constitutional Petition No. 6 of 2014)
  • H.G. Gandesha & Another v G.J. Lutaaya (Supreme Court Civil Appeal No. 14 of 1989)
  • Bank of Uganda v Joseph Nsereko & 2 Others (Supreme Court Civil Application No. 7 of 2002)

Full judgment

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

Mbuga v Raw Gold FZ-LLC (Miscellaneous Application 406 of 2024) [2024] UGCommC 221 (16 July 2024)
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.