The Commercial Division of the High Court of Uganda, presided over by Hon. Justice Patricia Mutesi, has partially granted Airtel Uganda Limited’s request for the Court to stay the execution of Jamaican musician Garfield Spence (Konshens)’s more than $180,000 Court Award in general and exemplary damages against the telecom company for copyright infringement pending the determination of the company’s appeal in the Court of Appeal, of the High Court decision that resulted in that Award. (Read our news report here).
Justice Patricia Mutesi ordered Konshens to recover not more than 70% of the damages they awarded, leaving Airtel to withhold 30% of the same until the disposal of its Appeal.
In its application before the Court, Airtel Uganda Limited contended that its appeal in the Court of Appeal against the decision of the High Court had a high likelihood of success in which event the appeal case would be rendered useless or nugatory if the Court did not stay the execution of the judgement awards.
The telecom company argued further that Konshens had already taken steps to realise the Judgement awards against it as evidenced by his extraction of the judgement decree and the taxation of his Bill of costs yet being a foreigner with no known assets in Uganda if the appeal case against him succeeded it would be difficult to get him to refund the judgement awards in case he was allowed to proceed with the execution of the High Court judgement decrees.
The company contended it was ready and willing to deposit security for the performance of its liability ahead of its appeal.
While agreeing that indeed there was a threat of execution of the judgement decrees against Airtel, Justice Patricia Mutesi noted, in her ruling delivered on Friday, 9th August, 2024 that the likelihood of success of Airtel’s appeal was not particularly high in light of the company’s admission during the trial that it had used Konshens’ songs without his consent thereby admitting to infringing his copyright.
Secondly, the learned Judge, observed that Airtel’s appeal seemed to hinge on the argument that the damages awarded to Konshens are very high and they should be paid by the 3rd respondent (Onmobile Global Limited), the company that purported to sell Konshens’ music (indemnification).
To the contrary, according to the Judge, the damages awarded to Konshens are “modest” considering they were based on a small portion of the fees he normally charges to license his music and not the whole fees. Further, that courts are wary of giving effect to indemnification clauses in agreements where the party seeking to rely on them has been negligent or has contributed to the breach of the agreement.
“Without delving into the merits and details of the appeal, I recall that, at the trial, the Applicant (Airtel) admitted that the suit songs belong to the 1st Respondent (Konshens), that the suit songs were uploaded and vended on its website to its benefit but without the 1st Respondent’s consent and that it never paid anything to the 1st Respondent for the suit songs. I also recall that the copy of the Caller Ring Back Tune Agreement between the Applicant and the 3rd Respondent (Onmobile Global Limited) adduced in evidence did not name any of the suit songs as those in respect of which the 3rd Respondent had consent from the author to create derivative works from. There is also a long history of precedents from this Court and other courts of record in Uganda and elsewhere in the Commonwealth in which indemnity clauses have been disregarded once the parties seeking to rely on them are proved to have been grossly negligent in allowing or enabling the breach to occur.” Justice Mutesi observed.
“The other category of the grounds of the appeal is that challenging the awards on damages and interest as being high, excessive and irregular. Again, without delving into the merits of these grounds, I also do not agree that they are all highly likely to succeed. I am convinced that the award of damages was actually more than modest as it was based on only a portion of what the 1st Respondent ordinarily charged for licensing the suit songs and not on the entire fee, yet this was also an option available to the Court at the time. In view of this analysis, I do not agree with the Applicant (Airtel) that its appeal has high chances of success or that its qualms over the decision in the main suit are as straightforward as it has made them out to be. The appeal is not a slam dunk and its probability of success remains debatable.” She added.
Thirdly, the learned Judge ruled that the execution of the decree could not impact the potency or the effectiveness (if any) of the Airtel’s appeal because of since the appeal is essentially about the reversal of the monetary court awards, failure to stay the execution of the awards was incapable of rendering the appeal moot by impairing its character.
Fourthly, more hardship would be caused to Konshens and the 2nd respondent if Airtel’s request was allowed than would be caused to Airtel if the request was denied, the Justice Mutesi ruled.
The Judge reasoned that Konshens and the 2nd respondent had for years sought compensation for Airtel’s infringement of their works and upon obtaining the favourable Judgement from the High Court, Airtel immediately filed an Appeal of the Judgement and that it would be unfair for the recovery of their compensation to be delayed any further.
“In my considered view, denying the 1st and 2nd Respondents the opportunity to recover their respective decretal sums from the Applicant after all this time will inflict much more hardship on them compared to the inconvenience that would be avoided if this application is allowed thereby protecting such an affluent and reputable telecom operator from recovery pending the disposal of the appeal. Given its said status, the Applicant should hardIy find a problem paying off the decretal sum even before the appeal is decided. On the other hand, not having the same economic might, the 1st and 2nd Respondents would be much more heavily inconvenienced if they are not allowed to recover their decretal sums after all this time.” Justice Mutesi stated.
Consequently, the court resolved that “in the interest of Justice” considering the appeal case challenged the amount of damages and interest, Airtel be allowed to retain 30% of the damages awarded by the High Court and Konshens and his music distributor be allowed to recover not more than 70% of the damages they were awarded.
Principles of a Stay of Execution of Monetary Decrees
In her decision, Justice Patricia Mutesi explored quite extensively on the law regarding the stay of execution of monetary court decrees noting that stay of execution of a monetary court decree is unlike stay of execution of other reliefs.
As a general principle, Justice Mutesi observed that execution of a monetary decree is generally not stayed pending appeal because of the doctrine of restitution and the presumption that a Court hands down a right judgement that should be given effect.
The doctrine of restitution assumes that any money recovered under a decree can be refunded if the appeal is successful.
She stated: “If the execution of a decree or order does not impair the character of an appeal by rendering some or all of the grounds raised therein moot, that execution will not be stayed. As a general position, execution by enforcing the satisfaction of a money decree does not ordinarily pose any danger to the viability of the appeal due to the doctrine of restitution that allows an appellate court to order a judgment creditor who had already recovered the decretal sum through execution before the disposal of the appeal to refund that decretal sum, or any part thereof, to the judgment debtor upon the latter’s success in the appeal.”
Conditions for Granting a Stay (Lawrence Musiitwa Kyazze V Eunice Businge, SC Civil Application No. 18 of 1990)
1. Filing of a Notice of Appeal: The applicant must have filed a formal notice of appeal against the judgment or decree that they wish to stay. The court found that Airtel met this condition, as the company had filed a notice of appeal on August 24, 2023, shortly after the judgment was delivered on August 21, 2023.
2. Application Filed Without Unreasonable Delay: The application for a stay must be filed promptly, without unreasonable delay, after the decree or order is issued. The court found that the decree in this case was sealed on August 31, 2023, and the application for a stay was filed on March 25, 2024, following the taxation of the bill of costs on March 13, 2024 as an indicator of a threat of execution of the decree. Therefore the application was filed within a reasonable time frame.
3. Likelihood of Success on Appeal: The applicant must demonstrate that his appeal has a reasonable likelihood of success and is not frivolous. As illustrated above, the court scrutinized the grounds of Airtel’s appeal and concluded that the appeal did not have a high likelihood of success, particularly because Airtel had admitted to using Konshens’ songs without permission.
4. Serious or Imminent Threat of Execution: The applicant must show that there is an immediate and real threat that the decree will be executed before the appeal is heard. In this case, the court found that there was a serious and imminent threat of execution, as Konshens had already taken steps to enforce the decree, including extracting the decree and having the bill of costs taxed. The court noted that these actions constituted overt steps towards execution. (Junaco (T) Limited & 2 Ors V DFCU Bank Limited, HCMA No. 0027 of 2023).
5. Provision of Security for Due Performance: The applicant must offer to provide security for the due performance of the decree, in case the appeal is unsuccessful. While Airtel argued that it was a leading tax payer suggesting financial capacity to satisfy the decree, the court exercised its discretion and decided not to impose a security deposit as a condition for granting the stay.
6. Substantial Loss to the Applicant if the Stay is Not Granted: The applicant must demonstrate that they will suffer substantial and irreparable loss if the stay is not granted. The court addressed the concept of “substantial loss,” noting that mere financial loss does not qualify as substantial loss unless it is irreparable. Substantial loss refers to a loss that cannot be undone, which was not sufficiently proven by Airtel.
In Airtel’s case, the court determined that the company had not demonstrated that it would suffer irreparable harm, as any amount recovered by Konshens could potentially be refunded if the appeal succeeded. (Junaco (T) Limited & 2 Ors V DFCU Bank Limited, HCMA No. 0027 of 2023).
7. Balance of Hardship or Convenience: The court must consider the balance of convenience between the parties, weighing the potential harm to each if the stay is granted or denied. The court found that the balance of convenience favored Konshens, given that he had been pursuing compensation for nearly a decade. The court concluded that denying Konshens any recovery would inflict greater hardship on him than allowing the stay would on Airtel. (Kyambogo University V Prof. Isaiah Omolo Ndiege, CA Civil Application No. 341 of 2013).
“Substantial loss is not the ordinary loss to which every judgment debtor is necessarily subjected when he or she loses the case and is deprived of his or her property as a consequence. Substantial loss is only that loss which is truly irreparable, thereby negating the very essence of success in the appeal for the judgment debtor.” Justice Mutesi stated.
Case: Airtel Uganda Limited v. Garfield Spence aka Konshens and 3 Others. Counsel: Mr. Kanyike Yusuf and Mr. Coleman Ntungwerisho of M/S Katende, Ssempebwa & Co. Advocates (for the Applicant) and Mr. Baguma Cyrus of M/S Kabenge, Bwanika, Kisubi & Co. Advocates (for the 1st respondent), Mr. Mumbere Abraham of M/S Ortus Advocates (2nd respondent).
Benjamin Ahikiiriza is a legal writer and publisher of the Legal Reports Digital Media.