Kiggundu v Bank of Uganda & 41 Others (Miscellaneous Application 250 of 2002) [2002] UGCommC 34 (29 May 2002)

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL COURT)

MISC. APPLICATION NO. 250 OF 2002

(Arising from Misc. Application No. 7 of 2002)

SULAIMAN KIGGUNDU APPLICANT

VERSUS

| 1. | BANK<br>UGANDA<br>OF | ] | | |----|-----------------------------------------|---|-------------| | 2. | GREENLAND<br>BANK<br>(IN<br>LIQUIDATION | ] | | | 3. | FIBA<br>(U)<br>LTD | ] | | | 4. | JAMAL<br>MUHINDO | ] | RESPONDENTS | | 5. | MUSTAFA<br>MUTYABA | ] | | | 6. | HAJI<br>KAWESI<br>OTHERS<br>36<br>& | ] | | | | | | |

BEFORE: THE HONOURABLE MR. JUSTICE JAMES OGOOLA

RULING

Two days ago, on 27/05/02, Court dismissed Respondents' preliminary point of law challenging Sulaiman Kiggundu's *locus standi* to bring this instant application (see "Preliminary Ruling" in this matter). The Applicant seeks to set aside the consent order agreed by, *inter alia,* FIBA (U) LTD and 42 of its 50 shareholders (and duly entered by the Registrar ofthis Court on 29/4/02).

Subsequent to the dismissal ofthe Respondents' above challenge, the application was heard before me on its merits. Mr. Nerima, learned counsel for the Applicant, presented the merits ofthe Applicants' case. The lynchpin of his case appeared to be that the company's suit property at Plot 30, Kampala Road, was never ever mortgaged to Bank of Uganda in the first place; and could not therefore be sold by the Bank of Uganda as *mortgagee -* even with the consent of FIBA and of the 42 shareholders. Subsidiarily, he also contended that the consent order itself, as formulated, was irregular as not all the shareholders - in particular Mr. Kiggundu - participated in its formulation. He averred that this

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lack of participation constituted the injury suffered in this case, as it resulted in an irregular alienation of the company's property. Mr. Nerima conceded that indeed this injury redounded onto the company itself; but that, nonetheless, an individual shareholder (such as Kiggundu) was duty bound to protect the company's interests. Hence, Kiggundu's interest in this matter.

The Respondents' joint reply to the above submissions were as follows:

- (a) There was no necessity to consult Kiggundu regarding the consent order since he was not party to MA 7/02, nor was he an applicant in MA 6/02. The Applicants in that MA 6/02 were free (as all plaintiffs are) to prosecute, compromise, or even withdraw their action, as they pleased. Kiggundu, who was not an applicant in that application (having declined to become one when invited to do so), can do nothing about it. - (b) There was no injury inflicted on Kiggundu. Indeed, his affidavit in support of this application does not even as much as mention any such injury. The allegations in paragraphs 11 and 12 of his affidavit (to the effect that he neither concurred in nor was he a party to the consent order), do not amount to any injury. In any case, Kiggundu himself bears responsibility for whatever injury there might be, since he declined to join the Applicants in MA 6/02 (see paragraph 10 of Muhindo's affidavit of 23/5/02). - (c) The alleged irregularity of the consent order (namely, Kiggundu's nonconcurrence to the consent order) is based on the wrong and inaccurate assumption that Kiggundu was a party to MA 7/02: ( see Paragraphs 8-12 of his affidavit). He was not. That ground for his application is therefore misconceived. - (d) Bank of Uganda did not sell FIBA's 75% interest in the suit property as *mortgagee* (as alleged by the Applicant). Rather, FIBA itself and its 42 shareholders freely and willingly chose to permit Bank of Uganda to effect the sale (see clause 1(a) ofthe consent order).

(e) The sale proceeds were to be deposited on to and remain in a special account pending determination of MA 6/02 by the Court. Accordingly, the consent order does not render MA 6/02 nugatory.

I am in total agreement with Respondents' above arguments. The Applicant was not a party to MA 7/02, nor indeed was he an applicant in MA 6/02. Thus, he had no right to be consulted on nor to concur in the consent order. Accordingly, his non-participation in that decision cannot and does not amount to an injury to him. Respondents (in their capacity as Applicants in MA 7/02) were free to *sue* (as they did in MA 6/02). Having so sued, they were equally free either to *prosecute* that suit or to *compromise* it (as they did through their consent order under MA 7/02. In these circumstances, the consent order cannot be said to have caused the Applicant any injury - and particularly so as he himself had quite deliberately declined to join the applicants in that action.

The Applicant's contention that Bank of Uganda sold the suit property in its capacity as mortgagee, is not at all borne out by the facts. Clause 1(a) of the consent order makes it abundantly clear that it was FIBA itself (and its 42 shareholders) who voluntarily permitted Bank of Uganda to sell FIBA's 75% interest in the suit property. (The other 25% interest in that property, owned by Greenland Bank, is not relevant to the instant application). Two important conclusions flow from this clarification of the non-mortgagee status of Bank of Uganda. First, there is no "irregular alienation" of FIBA'^s property - as forcefully alleged by the Applicant. Second, no injury arises from that transaction - certainly no injury is inflicted on the Applicant by this transaction. Any such injury, if it had arisen at all, would redound to the company itself (FIBA), and not to the Applicant (Kiggundu). This position was quite amply and readily conceded by learned counsel for the Applicant himself. In this regard, Applicant cannot claim to be acting to protect the company'^s interests - as the

company cannot be protected against itself; nor could the Applicant as a minority shareholder claim to protect the interests ofthe 42 majority shareholders against themselves.

Applicant's averment to the effect that maintenance of the consent order would render MA 6/02 nugatory, is unsustainable. Clause 1(d),(e), and (f) of the consent order are indisputably clear that the consent order does not expunge MA 6/02. On the contrary, the proceeds of the sale of the suit property are to be deposited and maintained in a special account without disposition, until final judicial determination of MA 6/02 by this Court. Furthermore, those proceeds are to be paid out only to such parties as will be determined by Court in the context of MA 6/02 - with any aggrieved parties being afforded an opportunity to appeal the Court's determination of MA 6/02. It is evident, therefore, that MA 6/02 is not in any way rendered nugatory by the consent order.

In this Court's view, the consent order appears to establish a reasonable, realistic and rational solution to the underlying dispute between the parties. On the contrary, Kiggundu's application appears to seek to set aside the consent order, but without suggesting, indicating or even alluding to any concrete alternative solution for resolving the underlying dispute. What then does the Applicant intend to do about the dispute ifthe consent order is set aside as prayed by him? We have no clue; and the Applicant has offered none. By declining to join the company and his fellow 42 shareholders (who are Applicants in MA 6/02), Kiggundu (who is a Respondent in that application) stands to resist singlehandedly the efforts ofthe company and the majority shareholders - and thereby to compound and aggravate the dispute between the parties. Court cannot sanction or be a party to any such rash and reckless approach to the resolution of live disputes that come before it.

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In the premises, the application is hereby dismissed, with costs awarded to the Respondents.

Ordered accordingly.

29/05/02 James Ogoola JUDGE

DELIVERED IN OPEN COURT, BEFORE:

Nerima, Esq - Counsel for the Applicant Masembe Kanyerezi, Esq - Counsel for ¹st Respondent Moses Adriko, Esq - Counsel for ²nd Respondent Kavuma Kabenge, Esq - Counsel for ³rd - 42nd Respondents J. M. Egetu - Court Clerk

> 29/05/02 James Ogoola JUDGE