HIGH COURT CLARIFIES THE PRINCIPLES ON THE STAY OF EXECUTION IN MONETARY JUDGMENTS — UNDER ORDER 43 Rule 4(3) OF THE CIVIL PROCEDURE RULES.
- Waboga David
- Apr 5
- 5 min read
Brief of the case DFCU Bank Limited v Crane Management Services Limited (Miscellaneous Application No. 0236 of 2025) [2025] UGHC 142 (1 April 2025)
Area of law: Civil Procedure
Topic: Stay of Execution Under Order 43 r 4(3) Introduction Justice Stephen Mubiru reaffirmed the legal standards for granting a stay of execution pending appeal, particularly in cases involving monetary decrees. The Court held that:
"If the judgment is of a nature to be actively enforced by execution and its execution does not delay or impair the character of the appeal, a stay will ordinarily not be granted."
The default presumption is that monetary awards do not render an appeal nugatory, especially if the respondent is solvent and restitution is possible. Thus, exceptional circumstances must be shown for a stay to be granted.
Facts
The respondent, a manager and letting agent of Meera Investments Ltd, entered into a five-year tenancy agreement signed with the applicant (tenant) from October 1, 2013, to September 30, 2018.
The applicant defaulted on rent, prompting the respondent to sue for US $385,728.54 and UGX 2,998,558,624/=.
Judgment was entered in the respondent’s favor on 16th August 2024, awarding UGX 400 million in general damages and interest at 10% from 1st Feb 2018.
On 6th Feb 2025, the respondent applied for execution via a garnishee order to recover UGX 8,069,802,038/= from the applicant’s accounts in Bank of Uganda.
Applicant's Arguments:
The Applicant filed a notice of motion seeking a stay of execution pending the outcome of an appeal, claiming:
The appeal has a high likelihood of success.
Execution would render the appeal nugatory, especially given the garnishee application.
The respondent is only an agent, not the actual landlord, and hence cannot assure a refund if the appeal succeeds.
UGX 8 billion is a significant sum that would cripple its operations and affect appeal efforts.
Willing to deposit 20% of the decretal sum as security for due performance.
Respondent's Arguments
The Respondent claimed that the application is mala fide, meant to disrupt execution proceedings.
The Applicant participated irregularly in the garnishee hearing, delaying matters.
A mere notice of appeal (filed 7 months prior) is not enough to justify a stay.
The monetary nature of the decree means the appeal wouldn’t be nugatory if paid.
Meera Investments Ltd is financially sound and could refund if necessary.
A delay in challenging judgment despite full participation in related proceedings shows bad faith.
No evidence presented that payment would cripple the applicant.
The supplementary affidavit with a draft memorandum of appeal was late and improper, trying to patch up weak pleadings.
Key Issues
Whether a stay of execution is warranted when a monetary decree is involved.
The respondent’s legal standing and capacity to execute judgment as an agent.
The principle of tenant estoppel—a tenant cannot dispute landlord’s title once rent has been paid.
Proper timing and admissibility of supplementary affidavits and appeal documentation.
Appropriate amount of security for stay—applicant proposes 20%, respondent suggests 75% referencing Kabiito Karamagi v. DFCU.
Holding Justice Stephen Mubiru held that the grant of a stay of execution pending appeal is a discretionary remedy that requires satisfaction of specific conditions laid out under Order 43 rule 4(3) of the Civil Procedure Rules.
The court must be satisfied that the appeal is arguable or cannot be categorised as hopeless and, particularly in cases involving monetary decrees, there must exist special or exceptional circumstances to justify a stay.
Central to the court’s consideration is whether the judgment creditor would be able to refund the decretal sum if the appeal succeeds, as this risk could render the appeal nugatory.
Referencing the precedent in Lawrence Musiitwa Kyazze v. Eunice Businge, SCCA No. 18 of 1990, the Supreme Court outlined key requirements including proof of substantial loss, absence of unreasonable delay, and provision of security.
Additionally, as emphasized in Kyambogo University v. Prof. Isaiah Omolo Ndiege, CA Misc. Application No. 341 of 2013, the applicant must show that the appeal is not frivolous and that execution would result in more hardship than denying the stay.
Rule of Law
The principle emerging from the decision is that courts are inclined to maintain the balance between preserving the appellant’s right of appeal and protecting the respondent’s entitlement to enjoy the fruits of their judgment.
An arguable appeal alone is insufficient if it lacks a real possibility of success or if the applicant fails to demonstrate that the execution would cause irreversible or substantial loss.
Citing Wilson v. Church (No.2) (1879) 12 Ch. D. 454 and Baker v. Lavery (1885) 14 QBD 769, Justice Mubiru reiterated that execution should not be stayed where satisfaction of the decree is reversible or compensable unless there is credible evidence of a risk of non-recovery.
Although financial hardship may influence the court’s discretion, a stay cannot be granted merely on the ground that the appellant would be financially ruined—as affirmed in Linotype-Hell Finance Ltd. v. Baker [1993] 1 WLR 321.
The applicant must also provide or be ready to provide reasonable security for due performance of the decree, although courts have generally leaned towards security for costs rather than the entire decretal amount, especially in commercial disputes
Key Takeaways from the Ruling
1. Prerequisite Filing of Notice of Appeal
The court affirmed that a notice of appeal must be filed prior to seeking a stay. In the present case, a notice was filed on 29th August 2024, fulfilling this requirement.
2. Timeliness of the Application
An application for stay must be made without unreasonable delay. Despite a six-month delay post-judgment, the Court found the filing to be prompt given the garnishee proceedings filed just six days prior.
3. Prospect of Success on Appeal
Citing Lawrence Musiitwa Kyazze v. Eunice Businge, S.C. Civil Application No. 18 of 1990, the Court emphasized that the appeal must not be frivolous. The test is whether there is a realistic prospect of success. The applicant demonstrated arguable grounds supported by facts and law, satisfying this requirement.
4. Risk of Appeal Being Rendered Nugatory
Drawing from the precedent of Wilson v. Church (No. 2) (1870) 12 Ch. D. 454, the Court reiterated that an appeal may be rendered nugatory if execution causes irreversible effects, especially where refund from the respondent may be doubtful or uncertain.
The Court found sufficient basis to believe the appeal would be rendered nugatory if the stay was not granted.
5. Imminent Threat of Execution
The Court held that a garnishee application filed by the respondent on 6th February 2025 posed a serious and imminent threat of execution. Therefore, the risk was not speculative but actual and immediate.
6. Proof of Substantial Loss
Referring to Tropical Commodities Supplies Ltd v. International Credit Bank Ltd (in liquidation) [2004] 2 EA 331, the Court clarified that substantial loss must go beyond ordinary financial hardship. While the decretal sum (UGX 8B) was significant, the applicant, a commercial bank, had not shown it would cripple operations or ability to appeal. However, the risk of non-recovery from the respondent contributed to a finding of potential substantial loss.
7. Security for Due Performance
The Court reiterated that while security is required, it must be reasonable and not so onerous as to stifle the right of appeal. Security may include a deposit in an interest-bearing account or a bank guarantee. The applicant expressed willingness to provide security, which was considered favorably.
📝 Conclusion
The Court granted a conditional stay of execution, finding that:
The appeal is not frivolous and has merit.
Execution would likely render the appeal nugatory.
There is a serious and imminent threat of execution.
The applicant is willing to provide reasonable security.
Justice Mubiru’s ruling reinforces the high threshold required to obtain a stay of execution for monetary decrees. Applicants must present credible, objective evidence showing a real risk of irreparable harm or failure of restitution, while courts will weigh such risks against the rights of the judgment creditor.
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