Wakilii

Visare Uganda Limited & Another v Grant Thonton Management Limited (Miscellaneous Application 384 of 2024)

High Court · [2024] UGCOMMC 108 · 2024 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Miscellaneous application to set aside garnishee order nisi issued for recovery of further interest on decretal sum during period when execution proceeds were frozen by court order
Decision
Garnishee order nisi set aside in part; only taxed costs of shs. 19,174,144/= remain recoverable under the decree

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

A judgment debtor's liability to pay interest on a decretal sum continues until payment in full. Payment made to the judgment creditor's counsel, as authorised agent, constitutes payment within the meaning of Civil Procedure Rules Order 22 rule 1. Where full payment of principal and accrued interest was made before a freezing order, the creditor cannot claim further interest for the period when the already-paid funds were frozen, since the funds were in the creditor's possession through its agent. Application allowed; garnishee order for further interest set aside.

Outcome

Garnishee order nisi set aside in part; only taxed costs of shs. 19,174,144/= remain recoverable under the decree

Facts

The first applicant obtained a loan from KCB Bank Uganda Limited secured by a mortgage over land with condominium apartments. On default, it sold twelve units to Grant Thornton Management Limited (the respondent) under an agreement allowing redemption by 31st December 2020. A tripartite memorandum and consent decree were executed on 28th February 2020 and 31st August 2020 respectively. The applicant defaulted and the respondent obtained attachment and sale orders. The property was sold on 14th April 2023 for US $ 9,000,000. The bailiff paid the respondent US $ 6,012,066.6 in full satisfaction of the decree on 28th April 2023. Subsequently, on 12th May 2023, the court issued a freezing order over the remaining proceeds pending determination of the applicant's challenge to the sale. The funds were frozen until 22nd November 2023 when the application was dismissed. The respondent then sought a garnishee order for US $ 668,422.94, being further interest allegedly accruing during the freezing period.

Issues

  1. Whether interest continues to accrue on a decretal sum after payment has been made to the judgment creditor's authorised agent.
  2. Whether a freezing order issued by the court to preserve funds pending determination of an application suspends the judgment debtor's liability to pay interest on the decretal amount.
  3. Whether payment to counsel for the judgment creditor constitutes payment to the judgment creditor within the meaning of the Civil Procedure Rules Order 22 rule 1.

Orders

  • The order made by the Deputy Registrar allowing recovery of the further interest in the sum of US $ 668,422.94 as part of the ongoing garnishee proceedings is set aside.
  • The only sum recoverable under the decree nisi is shs. 19,174,144/= being taxed costs.
  • Each party to bear its own costs of this application.

Rules and key headnotes

Execution — Interest on decretal sum — Payment in full — Effect of payment to authorised agent
A judgment debtor's liability to pay interest on a decretal amount does not cease until the debt is paid in full. Payment may be made to the judgment creditor personally or to a duly authorised agent on the judgment creditor's behalf, provided that such agent has authority to receive payment. Payment to the judgment creditor's counsel, who is an authorised agent, constitutes payment in full within the meaning of Civil Procedure Rules Order 22 rule 1.
Freezing Orders — Effect on accrual of interest — Funds already paid to judgment creditor
Where full payment of the decretal sum and accrued interest has been made to the judgment creditor's authorised agent before a freezing order is issued, the judgment creditor cannot claim further interest for the period when the funds were frozen, because payment had already been made and the funds were in the creditor's possession through its agent. A freezing order does not entitle a judgment creditor to interest on amounts already paid.
Execution — Interest on decretal sum — Deposit in court distinguished from payment
Deposit of the decretal amount in court by a judgment debtor to secure a stay of execution does not constitute payment within the meaning of Civil Procedure Rules Order 22 rule 1. The mere deposit of the decretal amount in court does not pass title to the money to the decree holder and does not amount to payment because the court is not the judgment creditor's agent with authority to receive payment, and the deposit does not constitute an unconditional tender of the funds in satisfaction of the judgment.
Freezing Orders — Purpose and effect — Accrual of interest
The purpose of a freezing order is to prevent frustration or abuse of the process of the court, not to provide security in respect of a judgment or order. A freezing order only prevents a party from disposing of or dealing with assets; it does not suspend the terms of an underlying decree or prevent interest on a contractual or decretal obligation from continuing to accrue, unless the order expressly so provides.
Interest — Rationale for award of interest — Compensation for deprivation of use of money
The essence of interest is that it is a payment which becomes due because the creditor has not had his money at the due date. The purpose of awarding interest is to fully compensate a plaintiff for the loss of the use of funds to which he was legally entitled. It represents either the profit he might have made if he had had the use of the money or the loss he suffered because he did not have that use.

Legislation cited (11)

Cases cited (9)

  • JSC BTA Bank v Solodchenko [2011] 1 WLR 888
  • JSC BTA Bank v Ablyazov [2015] UKSC 64
  • Lakatamia Shipping Co Ltd v Su [2015] 1 WLR 291
  • Delhi Development Authority v Sardar Singh & Sons (2009) 1 ARB L R 446
  • Stanbic Bank Uganda Ltd v Atabya Agencies Ltd (Supreme Court Civil Appeal No. 3 of 2012)
  • Riches v Westminster Bank Ltd [1947] 1 All ER 469
  • Jefford v Gee [1970] 1 All ER 1202
  • Tate & Lyle Food and Distribution Ltd v Greater London Council [1981] 3 All ER 716
  • Vooys v Turner 49 S.W.3d 318

Full judgment

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

Visare Uganda Limited & Another v Grant Thonton Management Limited (Miscellaneous Application 384 of 2024) [2024] UGCommC 108 (11 March 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.