Wakilii

Uganda Commercial Bank and Another v General Parts (U) Ltd (Civil Application 30 of 1998)

Court of Appeal · [1998] UGCA 64 · 1998 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application by notice of motion for further security for costs under Rule 104(3) pending hearing of a civil appeal
Decision
Application granted; respondent ordered to furnish Shs.40 million further security for costs before the appeal is heard

Observed later treatment

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Holding

The Court overruled the preliminary objection, holding that following the sole partner's death the firm lawfully continued under a memorandum of understanding admitting new partners, so the applicant was properly represented. On the merits, the Court held the burden lies on the applicant to prove the respondent's incapacity (not mere unwillingness) to pay costs. The respondent's indebtedness exceeded Shs.2 billion, its assets were held under debenture and mortgage, it was under receivership, and it failed to provide any valuation of assets, raising an inference of impecuniosity. It was not essential that costs be taxed first. The Court ordered further security of Shs.40 million.

Outcome

Application granted; respondent ordered to furnish Shs.40 million further security for costs before the appeal is heard

Facts

The applicant (Non-Performing Assets Recovery Trust, associated with Uganda Commercial Bank) sought further security for costs against the respondent/appellant, General Parts (U) Ltd, pending Civil Appeal No.20 of 1998. The respondent had earlier paid the statutory Shs.200,000 security. The applicant contended the respondent was heavily indebted (upward of Shs.2 billion), was under receivership (though temporarily stayed by the High Court), and held all its assets under a debenture and mortgage, leaving it unable to pay costs if it lost the appeal. The respondent argued the debts were secured by its mortgaged properties exceeding the decretal amount plus a personal guarantee, that no monetary award had been made against it, and that the bill of costs had not yet been taxed. A preliminary objection was raised that the applicant's advocates, M/s Elue & Co., had ceased to exist upon the death of its sole partner, Edward Sembuzi Elue, on 14 July 1998.

Issues

  1. Whether M/s Elue & Co. Advocates had capacity to represent the applicant following the death of its sole partner.
  2. Whether the applicant was entitled to an order for further security for costs under Rule 104(3) pending the appeal.
  3. What amount of further security for costs should be ordered.

Orders

  • Preliminary objection overruled.
  • Application for further security for costs granted.
  • The respondent/appellant to pay Shs.40 million as further security for costs, or give an undertaking to pay the same, before the appeal can be heard.

Rules and key headnotes

Partnership — Death of Sole Partner — Continuation of Firm Under Memorandum of Understanding
Where the partners have agreed, the provisions of the Partnership Act relating to dissolution on death may be displaced, and a firm may lawfully continue under the same name and style following the death of a partner pursuant to a memorandum of understanding admitting new partners.
Security for Costs — Burden of Proof — Incapacity Distinguished from Unwillingness to Pay
On an application for further security for costs the burden lies on the applicant to prove the respondent's incapacity to pay costs; mere unwillingness to pay, or mere failure to pay costs already awarded, is insufficient to found the order.
Security for Costs — Taxation Not a Precondition — Court's Discretion on Amount
It is not essential to the making of an order for further security for costs that a bill of costs be drawn up or taxed; the court may look at all the circumstances of the case and fix a reasonable amount having regard to the probable costs the applicant will incur.
Security for Costs — Receivership as Prima Facie Evidence of Insufficient Assets
The placing of a company under receivership is prima facie evidence that its assets will be insufficient to pay the applicant's costs unless evidence to the contrary is given, and a respondent's failure to produce a valuation of assets raises an inference of impecuniosity.

Legislation cited (5)

  • Rules of the Court of Appeal r.104(3)
  • Partnership Act (Cap.85) s.36
  • Partnership Act (Cap.85) s.37
  • Business Names Registration Act (Cap.87) s.5
  • Business Names Registration Act (Cap.87) s.8

Cases cited (4)

  • C.M. Combined v A.K. Detergents (Civil Application No. 34 of 1995)
  • Lalji Gangji v. Nathoo
  • Hills v. London Passenger Transport
  • The Dominion Brewery Ltd v. Foster [1897]

Full judgment

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Uganda Commercial Bank and Another v General Parts (U) Ltd (Civil Application 30 of 1998) [1998] UGCA 64 (16 December 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.