Wakilii

Permex International (U) Limited v Allied Bank International (U) Limited (Miscellaneous Application 571 of 1999)

High Court · [1999] UGHC 27 · 1999 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for temporary injunction arising out of High Court Civil Suit No. 549 of 1999
Decision
Application for temporary injunction dismissed with costs to the respondents

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court dismissed the application for a temporary injunction restraining the sale of the applicant's stock-in-trade by receivers appointed by the bank. While the applicant established a prima facie case with a probability of success on the question of whether the debenture securing earlier failed facilities remained valid for later facilities, the applicant failed to prove irreparable injury that could not be adequately compensated by damages. The monetary nature of the stock-in-trade meant damages would be adequate compensation.

Outcome

Application for temporary injunction dismissed with costs to the respondents

Facts

The applicant company traded in motor vehicle tyres, tubes and batteries. In September 1998, the first respondent bank offered overdraft and credit facilities secured by a floating debenture dated 16 September 1998 over the applicant's stock-in-trade. The initial facility failed to materialise. In December 1998, the applicant sought and was offered new credit facilities by letter dated 11 December 1998. On 30 April 1999, the bank appointed the second and third respondents as receivers pursuant to the September 1998 debenture. On 4 May 1999, the receivers entered the applicant's premises and took over the stock-in-trade. The applicant filed suit challenging the validity of the receivers' appointment and sought a temporary injunction to restrain sale of the assets pending final disposal of the main suit.

Issues

  1. Whether the applicant satisfied the conditions for the grant of a temporary injunction under Order 37 Rule 1 of the Civil Procedure Rules.
  2. Whether the applicant established a prima facie case with a probability of success.
  3. Whether the applicant would suffer irreparable injury that could not be adequately compensated by damages.
  4. Whether the debenture of 16 September 1998 remained valid security for the credit facility offered and accepted on 11 December 1998.
  5. Whether the appointment of receivers pursuant to the debenture was lawful.

Orders

  • Application dismissed.
  • Costs awarded to the respondents.
  • Case fixed for hearing on 8 November 1999.

Rules and key headnotes

Civil Procedure — Temporary Injunctions — Test for Grant — Prima Facie Case, Irreparable Injury, Balance of Convenience
Before granting a temporary injunction under Order 37 Rule 1 of the Civil Procedure Rules, the court must consider three matters: first, the applicant must show a prima facie case with a probability of success; secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury which would not adequately be compensated by an award of damages; thirdly, if the court is in doubt, it will decide the application on the balance of convenience.
Civil Procedure — Temporary Injunctions — Proof of Irreparable Injury — Monetary Loss
Where the subject matter of an application for temporary injunction is stock-in-trade intended for sale to realise monetary value, the applicant cannot establish irreparable injury if damages awarded to the equivalent value would adequately compensate him. A temporary injunction will only be granted where irreparable injury is likely to occur which would be incapable of atonement by way of damages.
Contract Law — Debentures — Failure of Consideration — Effect on Security
Where a debenture is executed for a specific credit facility which fails to materialise, the consideration for that debenture fails. A subsequent new credit facility with different terms and amounts requires a new debenture to be executed to incorporate those new terms, and the earlier debenture does not automatically secure the new facility.
Civil Procedure — Temporary Injunctions — Prima Facie Case — Proof by Affidavit
An applicant must prove by affidavit or otherwise that he has a prima facie case with a probability of success. Annexures to the affidavit constitute such other evidence. The onus is on the applicant to prove by evidence the matters being alleged in support of the application.
Civil Procedure — Temporary Injunctions — Failure to Satisfy Test — Effect
Where an applicant fails to satisfy the court that he will suffer injury which damages cannot atone, the court will not grant a temporary injunction. If the applicant fails to establish one of the essential conditions for granting an injunction, it is not necessary for the court to consider the balance of convenience.

Legislation cited (1)

Cases cited (7)

  • Noor Mohamed Jan Mohamed v Kassamali Virji Madhani (1953) 20 EACA 8
  • Kiyimba-Kaggwa v Katende (1985) HCB 43
  • Giella v Cassman Brown & Co Ltd [1973] EA 358 (CA-U)
  • Robert Kavuma v International Hotel (Civil Appeal No. 8 of 1990)
  • Nsubuga & Another v Mutawe [1974] EA (CA)
  • UMSC v Sheikh Kassam Mulumba & 4 Others [1980] HCB 110
  • Francis Nyende & Another v Michael Okwalinga & Another (Miscellaneous Application No. 477 of 1998)

Full judgment

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

Permex International (U) Limited v Allied Bank International (U) Limited (Miscellaneous Application 571 of 1999) [1999] UGHC 27 (30 August 1999)
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.