Commercial Law Index

The court considered an appeal from a High Court decision that dismissed an application to set aside part of a previous judgment. The broad circumstances related to a series of judgments that related to who was entitled to vacant possession of land. However, the time within which to lodge the appeal had lapsed. The court restated the position on what the court must consider when dealing with an application for the extension of time. Such an enquiry is three-pronged involving three questions namely: (1) establishing sufficient reasons for the court to extend the time to lodge the appeal; (2) whether the applicant is guilty or not of dilatory conduct; and (3) whether any injustice will result from the application not being granted. 

The court held that because the matter in this case raised serious questions of law that need to be addressed, it would be in the interests of justice to extend the time to file their appeal.

The court also dealt with affidavits as evidence and provided that just because they were not duly endorsed, does not mean the court will reject them. Further, where it is alleged that part of an affidavit is false, a court can sever that part and rely on remaining paragraphs.

The applicant sought a declaratory order stating that the first respondent was in contempt of a court order which restricted him from transferring, alienating and or disposing of the 60% shareholding in the third respondent company. 

The court considered whether the first respondent was in contempt of court. It was held that the first respondent was indeed in contempt of an order issued by the same court in 2015.

When the first respondent argued that the transfer of shared occurred in 1997, the court examined the third respondent company’s annual returns from 2008 to 2015 which reflected share ownership to belong to two entities; Tanwood Ltd and Garwood Ltd. At the time neither Busa Ltd nor Queen Foreign Ltd appeared as shareholders. The court also examined a company search that was conducted in 2016 which reflected a change in shareholding; Queen Foreign Ltd was a majority shareholder. The court accepted the above as prima facie proof of contempt of court. The court relied on previous judgments that outlined the conditions that have to be met in order to legally prove that contempt of court occurred; it was held that all conditions were met.

As a result of contempt, the court disregarded the purported transfer of shares in the third respondent company and stated that the power of attorney had no effect whatsoever. The court awarded costs to the applicant. No fine was imposed.
 

Plaintiff instituted proceedings for breach of contract, special damages, and general damages. Defendant denied any breach took place, and contended that the dispute ought to have been referred to an arbitrator. Defendant also instituted a counterclaim for breach of contract.

The defendant approached the plaintiff for assistance in carrying out a contract with BCEG (Rwanda), and entered into a memorandum of understanding that the profits after expenses would be divided. The defendant failed to pay plaintiff an outstanding amount of monies, or for expenses incurred. 

The issues for determination were whether the matter ought to have been referred to arbitration; whether the defendant breached the contract; and the remedies available to the parties.

Regarding issue one, the court stated that the matter could only be referred to arbitration in terms of the parties’ agreement if any of the parties applied to court for arbitration. Though an arbitration clause existed, no application was made to refer the matter to arbitration. The court could not invoke its inherent jurisdiction to refer the matter to arbitration without an application being made.

As regards issue two, the court found that the plaintiff proved that the defendant breached the contract. The defendant failed to deal specifically with the claims of the plaintiff, and instead provided blanket denials which the court held to be insufficient to disprove the plaintiff’s claims.

As regards the remedies available to the parties, the plaintiff failed to prove liability for special damages, but was entitled to general damages.
 

The applicant was directed to use other means to recover a judgment debt. The application was instituted to hold the second to sixth respondents liable for the first respondent’s debt as the controlling company of the first respondent.

The applicant argued that unless the corporate veil was lifted, and the second to sixth respondents were ordered to pay the debt, the applicant would not be able to recover the  judgment debt. 

The issues before the court were whether corporate veil could be lifted.

The court held that the first respondent company and second respondent company were one and the same. From the evidence, the third to sixth respondents were acting on behalf of the first and second respondents.

Grounds for lifting the veil were provided in section 20 of the Companies Act, and included where a company or its directors are involved in acts of fraud. The court held that the instruments of the first respondent were honestly executed. Failure to execute the court order was not reason for lifting the corporate veil as it was not evidence of fraud. However, a further ground for lifting the corporate veil was to prevent the deliberate evasion of contractual obligations. The court held that the third to sixth respondents’ resolve to sell the properties were attempts to prevent the realization of the judgment debt, and using the first respondent as a mask for fraud. 

The application was granted.
 

In this case, the court made a determination on an application to set aside a consent judgment that made provision for share transfer, land transfer and a special resolution.

The court determined whether the fourth defendant had the authority to enter into the consent judgment. The court applied the indoor management rule to make a finding that the fourth defendant had such authority and that parties outside did not have to enquire about the fourth respondent’s authority.

The applicants raised an objection that the consent judgment contained unpleaded issues in the prior suit by including legal entities or companies which were not parties to the suit. This objection failed since the parties had elected to be bound by what they agreed.

On the issue of whether the fourth respondent had colluded with the other respondents to defraud the applicant, the court held that it lacked merit since the fourth respondent was duly authorised by the applicants to represent them. The applicants claimed that there was no special meeting to sanction the change of name and offering the first applicant interest in land but on the evidence tendered, the court was satisfied that the meeting took place.

The court dismissed the application to set aside the consent judgment thereby denying the consequential order sought to set aside transactions validated by the consent judgment. Accordingly, the application was dismissed with costs.

The appellant who undertook to invest and acquire shares in a telecom company brought an action
against the respondents for breach of contract, damages and interest. The appellant’s suit was dismissed
on a preliminary point of law as it disclosed no cause of action against the 2 nd and 3 rd respondents.

The applicants brought suits which were later consolidated against the respondents alleging that they were
acquired through fraud. The trial judge entered judgment against the applicant and declared her trespasser
without interest in the suit land. The applicant brought an application for stay of execution pending
disposal of appeal.

The applicant was a client of the first and second respondents, who represented the plaintiff (third respondent, a company) in a case against the applicant. The applicant claimed that during the legal representation, the first and second respondents became aware of facts prejudicial to him which were a violation of advocate and client relationship, thus applied for an injunction. 

The court considered whether the first and second respondents also handled matters which would arise in the suit against the applicant while representing the third respondent.

The court held that where there was a fiduciary relationship, the irrebuttable presumption is that there is a possibility of disclosure. Further, although some authorities state that the applicant should plead the confidential information that could be reviewed, recent authorities have held that such pleading would be contrary to the intended confidentiality. 

The court found that there was a fiduciary relationship between the first and second respondents. Moreso, the parties had a relationship of legal and litigation interaction. Therefore, information prejudicial to the applicant would likely emerge. 

The court accordingly granted the application and ordered the disqualification of the first and second respondents from the pending suit.
 

This was a second appeal by the appellant
against the decision of the Court of Appeal
which ruled that terminal benefits paid to the
respondents were not taxable under Section 19
of the Income Tax Act. The background is that
the respondents were retrenched and awarded
terminal benefits for which they sought from
the appellant the tax due. The appellant
reviewed and presented a sum that was
contested by the respondents and the high court
ruled that the amount given to the former
employees was akin to gratuity which was tax
exempt. The court of appeal agreed with the
trial court hence this appeal.

In this case the appellant sought an order of Supreme Court extending the time within which to serve a notice of appeal. Counsel for the applicant lodged a notice of appeal well within the time prescribed by the law but the respondent’s counsel was served three days out of time. The applicant apportioned the blame for this delay on the staff of the Court of Appeal which, according to the applicant, failed to make available a signed notice of appeal on time.

The court considered the application for extension of the prescribed time in light of Rule 5 of the Rules of the Supreme Court. According to this rule, the court may grant such an extension if it finds sufficient reason to do so. The court found that the fact that the applicant promptly filed the notice of appeal demonstrated zeal on the applicant’s part. However, counsel for the applicant failed to demonstrate that the court staff caused the delay and did not explain why it took nearly four months to file the application for extension before the Supreme Court. Nevertheless, the court found that refusing the application would amount to denying the applicant’s right to present and prosecute his appeal and would have disproportionately negative consequences on the applicant. The court, therefore, used its discretionary powers to grant the extension sought, thereby validating the notice of appeal and the appeal itself.

The court concerned whether the goods seized by the defendants were all released pursuant to a consent to judgment being signed, and payment being fulfilled. 

The plaintiff instituted action against the defendants for a declaration that they had breach a consent order. The defendants, without the plaintiff being present, entered a warehouse and seized a substantial number of goods. 

A consent to judgment was entered into, wherein it was alleged that the defendant had breached the consent by not releasing all the goods. The plaintiff sought recovery of the goods and said that the seizure was unlawful. 

The court found that the test to be applied is as follows: 1) whether all goods were released? 2) If not, what is the value of the goods not released and the potential remedies available? 

The court found that the burden of proof lies on the party who asserts that the truth of the issue is in dispute. When that party adduces evidence, which is sufficient to raise a presumption that what he alleges is true, the burden of proof shifts to the other party to counter allege and produce evidence to rebut the presumption. 

The court found that a substantial portion of the goods were not released as a result of the defendant being overburdened in their workforce, which deprived the plaintiff from use of the proceeds of the goods. Therefore, the plaintiff should be compensated for the economic inconvenience and awarded general damages. 

The plaintiff tried to claim exemplary damages for breach of consent to judgment, however this was denied as it was not proven that the conduct of the defendants amounted to oppressive, arbitrary or unconstitutional behaviour. 

Application upheld. 
 

In this appeal, the first respondent filed a suit in the lower court against the appellants claiming damages for trespass on his access road and a permanent injunction from blocking the access road. Court awarded him damages and in enforcing it a warrant of attachment was issued of the appellants’ property with his school properties. The same was purchased by the second respondent by auction despite the attempt to block the sale. The grounds of appeal are premised on failure to evaluate evidence and to nullify the illegal sale.

The respondent successfully brought a suit against the appellants for
declaration that she was the rightful owner of the suit land, vacant
possession, permanent injunction and damages. The appellants were
dissatisfied with the judgment of the trial court hence this appeal.