Rukikaire v INCAFEX Limited (Miscellaneous Application 4 of 2021) [2022] UGSC 25 (4 January 2022)

IN THE REPUBLIC OF UGANDA

IN THE SUPREME COURT OF UGANDA HOLDEN

AT I(AMPALA

MISCELLANEOUS APPLICATION NO. O4 OF 2O2L

(ARTSTNG OUT OF CrVIL APPEAL NO. O3 Or 2015)

MATTHEW RUKII(AIRT: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :

APPLICANT

VERSUS

tF

INCAFEX LTD :::::::::::::::::::::::::::::::::::::::::: RESPONDENTS

RULING OF JUSTICE MIKE J. CHIBITA, JSC:

l\

tl

This is an application by the applicant, Matthew Rukikaire, for orders that the respondent, Incafex Ltd, be held in contempt of the orders of this court issued vide Supreme Court Civil Appeal No. 03 of 20 15. He further prayed for orders that the respondent company be wound up, a liquidator appointed in respect of the affairs of the company and the applicant be paid 45o/" of the sum due and owing to the respondent from the Government of Uganda arising from past dealings between the respondent and the government.

The applicant also prayed for declarations that the filing by the respondent of High Court Civil Suit No. 887 of 2018 was an abuse of court process, that the Commercial Court division where the suit was

I

filed lacks jurisdiction to overturn, va-ry or interpret the decision of the Supreme Court, vide Supreme Court Civil Appeal No. 03 of 20 15. The Application was brought by Notice of Motion under rules 2(2), 42 and 43 of the Judicature (Supreme Court Rules) Directions on the following grounds, set out in the Notice of Motion:

tf

- a. That the applicant being a holder of 45% shares in the respondent companA, filed Company Cause No. 003 of 2004 in the Commercial Diuision of the High Court, wherein he sought relief against oppression. - b. That court allowed the petition, ordered a special audit to be conducted into the affairs of the respondent compang and made specific orders. - c. That the respondent company appealed to the Court of Appeal, which allowed the appeal - d. That the Applicant then appealed to the Supreme Court uide Ciuil Appeal No. 03 of 2015, wherebg the appeal was allowed and an order made for the appointment of an auditor. - e. That on 78th September, 2018 M/s PWC utas appointed to carry out the special audit. - f. That the meeting called bg the Auditors was frustrated bg one of the respondent's directors, Garuga Musinguzi utho refused to participate in the meeting by walking ouL - g. That in Nouember 2 0 1 8 the re spondent instituted a suit in the Commercial Diuision of the High Court, vide Civil Suit No. 887 of 2018, uhose subject matter is exactlg or substantiallg the

same as HCCS No. 003 of 2004 and SCCA No. 03 of 2O15, matters upon which court had alreadg rendered judgment.

I

- h. That the neut suit was an attempt to frustrate the orders of the Supreme Courtin SCCA No. O3 of 2O15 - i. That the conduct of the respondent compang is an injustice calculated to keep aliue a matter alreadg conclusiuelg determined bg court and aimed at preuenting the applicant from realizing the fruits of successful litigation. - j. That all efforts to ascertain the ualue of the assets and finances of the respondent were increasingly and continuouslg frustrated bg the respondent's directors. - k. That the respondent hauing fiustrated the audit as ordered bg court, the onlg wag for the applicant to get justice is for the companA to be woundup.

The application is supported by an affidavit sworn by the applicant, Matthew Rukikaire, in which he repeats the grounds set out in the Notice of Motion.

In reply to the application, the respondent filed an affidavit in reply deponed by its Managing Director, James Garuga Musinguzi.

In his affidavit, he raised some preliminary points of law relating to the supplementar5r affidavit filed by the applicant. He stated that some of the attachments were not legible whereas some of the affidavits were bad in law.

Regarding the orders of the High Court, he contended that instead of winding up, a special audit was ordered by the High Court, which

decision was appealed to the Court of Appeal and eventually to the Supreme Court which upheld the High Court decision.

a

He denied having walked out or frustrated the special audit, which, he averred, was amicably adjourned.

He further stated that the applicant is neither a shareholder, director, secretary nor other officer of Multiple Hauliers (EA) Ltd. Further that the directors of Multiple Hauliers (EA) Ltd have never agreed to pursue a claim against the respondent since they were fully compensated for their investment.

He averred that he filed HCCS No. 887 of 2018 seeking to set aside the judgment of the High Court as affirmed by the Supreme Court on grounds of fraud. He further stated that this matter is pending ruling by the High Court and that the applicant is only burdening the Supreme Court with a matter that is already before the High Court.

REPRESENTATION

At the hearing, the applicant was represented by learned Counsel John Barenzi and Benson Tlrsasiirwe of M/s Barenzi & Co. Advocates.

The Respondent who was in court, was represented by learned Counsel Walubiri Mukiidi of M/s. Kwesigabo, Bamwine & Walubiri Advocates.

They filed written submissions.

The submissions by Counsel for the applicant were a repeat of the grounds of the application as set out in the Notice of Motion. He further defended the propriety of bringing the application under the rules of Court.

He reiterated the assertion that the special audit had collapsed hence the application to seek further orders. He vehemently opposed the respondent's filing of HCCS No. 887 of 2018 in the High Court claiming that the High Court had no jurisdiction to hear the matter.

He submitted that the respondent is in contempt of court of the orders of court issued vide SCCA No. 3 of 2015. He referred court to Prof Frederick Sempebwa & 2 Others vs Attorney General SCCA No. O5 of 2O16 where court held that to establish contempt the following have to be shown to exist:

- That an order was issued by court

lt{

- That the order was served or brought to the notice of the alleged contemnor - That there was non-compliance with the order - That the non-compliance was willful or mala fide

He contended that all the ingredients were present in the instant case. He further stated that the fact of the respondent filing a Civil Suit in the High Court instead of complying with the orders of the Supreme Court was clear evidence of contempt. He cited Pheko & others vs Ekurhuleni Metropolitan Municipality No. 2 to state that contempt may be exhibited by willful disobedience and resistance to lawful orders.

Counsel further pointed out that filing of HCCS No. 887 of 2O18 by the respondent is an act of contempt because it is an attempt to ask

the lower court to substitute the decision of a higher court thereby putting the two courts on a collision course.

, I

On the issue of winding up, Counsel submitted that this was a prayer earlier made but court in its wisdom had deemed it premature, preferring a special audit hrst. He submitted that now that the special audit had been frustrated by the respondent, it was time for the order of winding up to be given. He referred court to sections 248 and 25O of the Companies Act.

On payment of 45o/o of the money due and owing from government, Counsel justified it by citing National Union of Clerical, Commercial, Professional and Technical Employees vs National Insurance Corporation SCCA No. 17 of 1993, which gives court wide residual powers to prevent or correct any injustice

He stated that there is compensation of Thirty billion shillings due to the respondenl, 45o/o of which amounts to Thirteen billion and five million shillings. He insisted that this matter of compensation had been raised from the time the matter was filed in the High Court and is not new as the respondent claimed.

He ended by praying for costs of the application.

In reply, Iearned Counsel for the respondent, restated the facts and denied the allegations of frustrating the audit exercise or orders of the Supreme Court by his client. He submitted that the meeting was adjourned to seek further guidance from Court, as contained in the affidavits in support of the respondent's reply.

Counsel continued that to the contrarlr, it was the applicant whose default on the terms of reference of the audit process that led to the impasse in the audit process. Specihcally, Counsel submitted, the applicant neither brought the directors of Multiple Hauliers, as required, nor did he furnish Powers of Attorney authorizing him to present their evidence.

i,

He submitted that the applicant is abusing the court process by filing the instant application and as such trying to use the rules of court to defeat the ends of justice. He cited Ayub Suleiman vs Salim Kikambalo to state that the question of whether a court should invoke its inherent powers in a given case is a matter for Court's discretion which should be exercised judicially. He called upon Court not to exercise this discretion in favour of the Applicant.

On civil contempt as presented by the Applicant, Counsel agreed with the law as spelt out but disagreed with the facts. He insisted that the audit meeting was adjourned by the Auditor for failures occasioned by the Applicant rather than the Respondent. He further submitted that the filing of HCCS No. 887 of 20 18 was never expressly prohibited by this Court and as such no contempt can be inferred from the facts as presented.

Learned Counsel cited fraud on the part of the Applicant and referred Court to Livingstone Sewanyana vs Martin Aliker Civil Application No. 4O of 1991 to contend that court can under its inherent powers in rule 1(3), now rule 2(21 set aside a judgment of the High Court confirmed by the Supreme Court but which is proved

to have been obtained through fraud. Alternatively, he added, the concerned party could file a fresh suit in the High Court to set aside such a judgment.

F

l

He informed court that the Respondent, on discovery of fraud, proceeded to file HCCS No. 887 of 2018, which suit is pending in the High Court on the exact same issues as are contained in this application. He prayed that this Court awaits the decision of the High Court before pronouncing itself on this application.

On the issue of winding up, Counsel objected and argued that there was no basis for it. He countered that the sections of the Companies Act cited by the Applicant were for grant of an alternative to avoid the extreme remedy of winding up.

In conclusion, Counsel submitted that in view of the foregoing, Court did not have the jurisdiction to appoint a Liquidator under the Companies Act. He contended that under section 91 of the Insolvency Act, the issues of liquidation are best handled by the High Court as a trial court and not by the final appellate court.

He added that the pralr'er by the Applicant for 45oh of the money owing from Government compensation contradicted the prayer for winding up. In any case, he continued, there was no evidence that any specific sum of compensation had been agreed on as compensation between the government and the respondent company.

He prayed for the dismissal of the application with costs to the Respondent. I

The applicant filed a supplementary affidavit in response to the respondent's contention that the earlier affidavit was lacking in certain aspects. He therefore attached the missing documents including the Statutory Declarations, bills of lading, land titles and a financial report.

The Statutory Declarations are to the effect that the respondent never compensated Multiple Hauliers Limited.

RESOLUTION

( \

This is a matter that was handled by this court sitting as a full panel. A decision of the court was made and communicated to the parties.

I am convinced that their Lordships sitting as a full panel already considered all the issues now at play. From the submissions by Counsel, it is clear that the parties did not submit to the special audit as envisaged by their Lordships.

I am alive to the provisions of section 8 of the Judicature Act.

Section 8 of the Judicature Act provides as follows:

(1)A single justice of the Supreme Court mag exercise ang power uested in the Supreme Court in ang interlocutory cause or matter before the Supreme Court.

I am therefore in no doubt as to the legality of a single justice entertaining and determining the instant application.

It is not only not prudent but also premature, in this case, for a single judge, of the same court, to sit and make further, additional or different orders, before the orders of the full panel have been properly and exhaustively implemented. It is improper and borders on abuse of process.

t. ,

Otherwise there will never be an end to litigation. The Supreme Court would never stop hearing appeals disguised as applications for review, revision, clarification and a myriad of other prayers.

As Newbold P held in Lakhasmi Brothers Ltd vs Raja & Sons (1966f EA 313,314:

"There is a pinciple which is of uery great importance in the administration of justice and that pinciple is this:

"It is in the interest of all interested persons that there should be an end to litigation."

The principle was cited in the case of Obote lVilliam vs Uganda, SCCA No. lof 2OL7 and Mulindwa vs Kisubika SCCA No. 12 of 20L4

I decline to grant the orders prayed for. Parties are advised to return to PWC for the special audit as ordered in Supreme Court Civil Appeal No. 03 of 2015, now that the areas of disagreement have been clarifred by the parties as per their submissions in this application.

There is no order as to costs.

i{^ Dated at Kampaia this ... day of 1. 2O2y

Mike J. Chibita JUSTICE OF THE SUPRTME COURT