Wakilii

Nakato v Housing Finance Bank Limited (Miscellaneous Civil Application 1800 of 2021)

High Court · [2022] UGCOMMC 107 · 2022 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for stay of execution of a conditional temporary injunction order pending appeal
Decision
Application for stay of execution dismissed; applicant failed to satisfy the requirements for a stay pending appeal

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed an application for stay of execution of a conditional temporary injunction order pending appeal. The court held that where a temporary injunction is granted subject to a condition precedent which the applicant fails to satisfy by the stipulated date, the order lapses and cannot be stayed. The applicant failed to satisfy the majority of the essential requirements for a stay of execution, including demonstrating that the appeal would be rendered nugatory, that there was imminent threat of execution, that substantial loss would result, or that security for due performance had been furnished. The court emphasised that a conditional order has a limited lifespan until satisfaction of the condition precedent, and failure to perform the condition extinguishes the relief and discharges the order.

Outcome

Application for stay of execution dismissed; applicant failed to satisfy the requirements for a stay pending appeal

Facts

In August 2013, the applicant's husband, Mr. Mande Constant, secured a home improvement loan of UGX 375,000,000 from the respondent bank, mortgaging land at Munyonyo on which the couple's matrimonial home is situated. When he defaulted, the respondent issued demand and default notices. Mr. Mande Constant's suit challenging the notices was dismissed. The applicant then filed suit on 14 October 2021 seeking a declaration that the matrimonial home was unlawfully mortgaged and that the foreclosure process was unlawful. On the same day, she applied for a temporary injunction restraining the sale. The Registrar granted the injunction on 30 November 2021 on condition that the applicant deposit 30% of the claimed amount (UGX 245,152,122) by 30 December 2021. The applicant did not comply with the condition but instead filed an appeal on 7 December 2021 and the current application for stay of the order pending appeal. The respondent contended that the applicant had consented to the mortgage by executing a spousal consent form and statutory declaration, and that the application was designed to delay recovery.

Issues

  1. Whether the applicant satisfied the requirements for a stay of execution pending appeal under Order 43 rule 4(3) of the Civil Procedure Rules.
  2. Whether the appeal has a likelihood of success.
  3. Whether the appeal would be rendered nugatory if the stay is not granted.
  4. Whether there is a serious or imminent threat of execution of the order.
  5. Whether substantial loss would result to the applicant unless the stay is granted.
  6. Whether the applicant has given security for due performance of the order.
  7. Whether refusal to grant the stay would inflict more hardship than it would avoid.

Orders

  • Application dismissed.
  • Costs awarded to the respondent.

Rules and key headnotes

Civil Procedure — Stay of Execution — Conditional Orders — Effect of Non-Compliance with Condition Precedent
A conditional order has a limited lifespan until satisfaction of the condition precedent. If the condition is not satisfied before the specified time, the relief does not vest. Failure to perform the condition precedent extinguishes the relief and discharges the order. Once a court order has lapsed it can neither be extended nor enforced. A stay of execution cannot be sought on the basis of an order that has lapsed.
Civil Procedure — Stay of Execution — Requirements — Likelihood of Success on Appeal
The court must be satisfied that the prospects of the appeal succeeding are not remote but that there is a realistic chance of succeeding. More is required to be established than that there is a mere possibility of success. There should be a sound, rational basis, founded on the facts and the law, and a measure of certainty justifying the conclusion that the appellate court will differ from the court whose judgment has been appealed against.
Civil Procedure — Stay of Execution — Requirements — Appeal Rendered Nugatory
The sale of mortgaged property does not ordinarily pose the danger of rendering a pending appeal nugatory where the respondent is not impecunious. The presumption is that such sale will be reversible in the event of the applicant succeeding on appeal, or if not reversible, that damages will reasonably compensate the applicant. Where an applicant seeks only to enforce a right of occupancy as spouse of the mortgagor, such right is compensable in damages in lieu of reinstatement.
Civil Procedure — Stay of Execution — Requirements — Imminent Threat of Execution
An order of stay will issue only if there is actual or presently threatened execution. There must be a direct and immediate danger of execution of the order. There should be unequivocal evidence showing that unconditional steps as to convey a gravity of purpose and imminent prospect of execution of the order have been taken by the respondent. Steps that demonstrate a serious expression of intent include extracting the order, presenting and having a bill of costs taxed, applying for issuance of a warrant of execution, and issuing a notice to show cause why execution should not issue.
Civil Procedure — Stay of Execution — Requirements — Substantial Loss
Substantial loss does not represent any particular size or amount but refers to any loss, great or small, that is of real worth or value as distinguished from a loss that is merely nominal. Substantial loss cannot mean the ordinary loss to which every judgment debtor is necessarily subjected when he or she loses his or her case and is deprived of his or her property in consequence. The applicant must establish other factors which show that the execution will create a state of affairs that will irreparably affect or negate the very essential core of the applicant as the successful party in the appeal.
Civil Procedure — Stay of Execution — Security for Due Performance — Discretion of Court
In granting an order of stay of execution pending an appeal, the court has to balance the need to uphold the respondent's right to be protected from the risk that the appellant may not be able to satisfy the decree, with the appellant's right to access the courts. The requirement for security for due performance of the decree does not operate as an absolute clog on the discretion of the court. Courts have been reluctant to order security for the entire decretal amount as this is likely to stifle appeals, and have instead been keen to order security for costs.

Legislation cited (6)

Cases cited (8)

  • Lawrence Musiitwa Kyazze v Eunice Businge (Supreme Court Civil Application No. 18 of 1990)
  • Kyambogo University v Prof. Isaiah Omolo Ndiege (Court of Appeal Miscellaneous Civil Application No. 341 of 2013)
  • Amrit Goyal v Harichand Goyal and 3 Others (Court of Appeal Civil Application No. 109 of 2004)
  • Willis International Engineering and Contractors Ltd and Another v DFCU Bank (High Court Miscellaneous Application No. 1000 of 2015)
  • Tropical Commodities Supplies Ltd and Others v International Credit Bank Ltd (in Liquidation) [2004] 2 EA 331
  • Alice Wambui Nganga v. John Ngure Kahoro and another, ELC Case No. 482 of 2017 (at Thika); [2021] eKLR
  • DFCU Bank Ltd v Dr. Ann Persis Nakate Lussejere (Court of Appeal Civil Appeal No. 29 of 2003)
  • Erinford Properties Ltd v Cheshire County Council [1974] All ER 448

Full judgment

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Nakato v Housing Finance Bank Limited (Miscellaneous Civil Application 1800 of 2021) [2022] UGCommC 107 (21 February 2022)
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.