The Commercial Case Law Index is a collection of judgments from African countries on topics relating to commercial legal practice. The collection aims to provide a snapshot of commercial legal practice in a country, rather than present solely traditionally "reportable" cases. The index currently covers 400 judgments from Uganda, Tanzania, Nigeria, Ghana and South Africa.
Get started on finding judgments that are relevant to you by browsing the topic list on the left of the screen. Click the arrows next to the topic names to reveal a detailed list of sub-topics. Most judgments are accompanied by a short summary written by subject-matter expert postgraduate students from the University of Cape Town.
This case concerned the appellant's entitlement to notice of meeting prior to removal as company director. The appellant claimed relief for a declaration that his purported dismissal was a repudiatory breach of his contract of employment and that he was denied the right to a notice meeting pursuant to sections 236, 262 and 266 of Companies and Allied Matters Act (CAMA).
The counsel for the respondent contended that against the background of the appellant's contention the trial court had no jurisdiction to entertain the complaint. Given the above claim of the appellant, he should have approached the Federal High Court for the resolution of his complaint of the breaches and not the trial court.
This court held that the dismissal of the appellant was not lawful because of lack of due process. However, the trial court below lacked jurisdiction and since the trial court lacked the jurisdiction to enter the matter, the lower court, equally, lacked the jurisdiction to deal with the appeal before it. Thus, the appeal was found to be unmeritorious and was struck out for want of jurisdiction.
The appellant contended that the respondent, contrary to the decision of the lower court, be held responsible for the debts of a company. The appellant contended that the company was a mere façade, as the respondent was both a shareholder and subscriber of the company. The contract of service between the parties was not in writing. The court held that it is only when the claimant has proved the existence of the contract that the burden will shift to the defendant to prove his denial of its existence.
The main issue was whether the defendant was liable to pay the debts of the company.
In this case, the respondent did not go into the contract as an agent for the company. A company has no soul or body through which it can act, it can only do so through human agents; but which acts they cannot be personally held liable for. The court said that the effect of incorporation and registration of a company, firm etc is to confer on it legal entity as a person separate and distinct from its members. It is a legal person with a personality of its own.
The court went on to state that the appellant failed to show that the findings of the lower court were perverse and not based on the evidence adduced. This is why the appeal failed.
The appellant challenged the jurisdiction of the court to entertain the petition of the respondent to wind up the appellant company for being unable to pay its debts.
The court held that jurisdiction is a threshold issue and where there is a condition precedent to the exercise of jurisdiction, and then unless fulfilled, the court shall be devoid of the requisite jurisdiction to determine the matter. The dispute, if any must be within the parameters of disputing a debt; that is in good faith and on substantial grounds. The court stated that the appellant was supposed to put forward facts which would satisfy the court that there was something which was ought to have been looked into on the same matter.
Disputation of a debt can bar the court from allowing a petition for winding up a company which has failed to pay its debt. A real dispute must touch on the substance of the debt in its material particulars such as showing part of the debt had been settled. The court held that the appellant failed to make any payments to the respondent. Furthermore, the respondent satisfied the requirements of the act and the jurisdiction of the court was properly activated and the issue is resolved against the appellant.
The appeal was dismissed as it lacked substance.
This was an appeal against a decision of the court allowing an ex parte motion for the winding up of the appellant. The appeal was premised on the ground that the ex parte order was made against other parties who were not parties to the proceedings and were deprived of the right to be heard. The appellant further argued that the ex parte order was made without notice of the motion seeking the said orders being served on them which was regarded as contravening Order 4 of the Companies Winding-up Rules (the rules). The appellant also alleged abuse of court process by the respondent.
The respondent opposed the appeal by pointing out that issues raised by the appellant were substantial issues which cannot be dealt with in a preliminary objection. The respondent further disputed allegations of abuse of court process arguing that they at no point maintained two similar cases against the appellant.
The court held that where an order made by a court affects the interest of a non-party to a suit, the said party whose interest has been affected should complain. It ruled that it was out of place for the appellant to complain on behalf of the other parties. The court further pointed out that Order 4 of the rules does not allow freezing of assets and that the respondent breached Order 4 by filing an ex parte without serving a notice on the appellant. Thus the appeal was upheld.
The issue was whether the trial court had jurisdiction to hear a petition for winding up and whether the respondent had required authorization to petition for winding up.
The appeal emanated from the dismissal of the appellant’s objection to a petition for winding up the appellant company. The appellant argued that the trial court had no jurisdiction to decide on the matter. It pointed out that only the English courts had exclusive jurisdiction to decide on any dispute between the parties. Moreover, the appellant challenged the legal personality of the respondent arguing that they did not provide original certificates of incorporation and that the respondent did not receive authority of shareholders to petition for the winding up.
The respondent opposed the appeal on the grounds that the English courts had exclusive jurisdiction only on disputes and not on a petition for winding up. It further argued that it required a trail to verify the authenticity of the certificate of incorporation. Lastly the respondent pointed out that since they were duly incorporated, they were authorized to work on behalf of the shareholders.
The court in dismissed the first two points raised by appellant. The court held that the English court’s exclusive jurisdiction did not extend to petitions and that documents attached to an affidavit in an interlocutory application should not be used as an objection to the issue of admissibility. However the court ruled that the respondent required the approval of directors and shareholders to file a petition to wind up. Thus the appeal was upheld.
This is an appeal against a High Court decision granting a summary judgement. The dispute emanated from share trading facility offered to the appellant company by the respondent bank. However, the appellant failed to pay for the shares when payment fell due, prompting the respondent to approach the court where a summary judgement was awarded in favor of the respondent.
The appellant appealed the decision on the ground that it was not given a fair hearing. It pointed out that the determination through summary judgement ignored issues of merit. The appellant argued that sufficient issues had been raised to warrant a full trial of the case, and that it had a bona fide defense.
The respondent opposed the appeal on the basis that the summary judgement was employed to prevent a sham defense, and that an objection to summary judgement must address a specific claim not a general sweeping denial of the claim.
The court held that the case hinges on whether the appellant’s defense constitutes a triable issue. It found that the appellant failed to raise triable issues. It held that the trial court was correct in finding that the appellant defense was a sham. It ruled that the appellant was indebted to the respondent. The appeal was thus dismissed.
The appeal emanated from the advance of a loan by the first respondent to the appellant. The appellant deposited with appellant bank a certificate of occupation and a share certificate as security. The appellant then failed to repay the loan resulting in the sale of the appellant’s shares deposited as security. The appellant instituted legal proceedings against the respondent claiming that it was not indebted to the first respondent for any amount because the arrangement between the parties was a joint venture agreement and that the sale of the second appellants shares was done mala fide and without their consent.
The challenge was dismissed. The appellant appealed against the dismissal arguing that the trial court erred. It pointed out that the deed of mortgage was not properly executed and that the contract between the parties was invalid.
The respondent argued that the appellant was raising new issues not canvassed in the court below. It argued that there was a valid contract between the parties.
The court held that there was a loan agreement between the parties and the appellants did not complain of anomalies in the contract hence it waived any right it may have had. The court ruled that a party cannot raise new issues in an appeal and dismissed the appeal.
Trials – onus of proof in civil proceedings – plaintiff to adduce satisfactory evidence in support of their case
The appellant brought his initial suit against a decision of the main committee of the first respondent suspending him from the Lagos Polo Club. The initial suit was dismissed in its entirety.
The appeal concerned three issues. Issues one and two were decided together, and concerned whether the lower court was correct in holding that the respondents complied with the provisions of the Lagos Polo Club Constitution in suspending the appellant; and whether the main committee of the Club could delegate any part of its disciplinary functions to its Disciplinary Sub-Committee.
Generally, courts will rarely interfere with the decisions of voluntary associations except where rules of natural justice were ignored. At issue was whether the appellant was given a fair hearing, which the court held that he was. The main committee was empowered to discipline its members for misconduct. Furthermore, the main committee was empowered to co-opt other persons to act under its authority. The power to constitute a sub-committee was incidental to the power to co-opt persons. Issues one and two were resolved against the appellant.
Issue three concerned whether the lower court considered all the processes filed by the appellant when arriving at its decision. In determining issues, a court is not bound to list all the material considered. Failure to expressly mention all the different processes does not mean the trial court failed to consider them. The court found against the appellant on this issue.
The appeal was dismissed.
The applicants applied to the High Court to stay the proceedings in the case and to release the properties attached to them in order that they would add them to other assets of the company to be sold for all depositors of the company to be paid. The High Court however dismissed the application and applicants being aggrieved by the orders made by the court filed an application to the Supreme Court praying for an order of certiorari to quash the decision of the high court.
The main issue being the lawfulness of the grant of leave by the high court to applicants to proceed with their case after the winding up had commenced.
The court held that upon commencement of a winding up only secured creditors are allowed as of right to sue or continue with pending civil proceedings for the realization of their security. Any other person who has a cause of action against a company being wound up cannot sue as of right but may do so only with the prior leave of the high court. Similarly an unsecured creditor who has pending civil proceedings cannot continue with them without leave of the high court. So the applicants in this case who were not secured creditors were within their rights to apply for leave to continue with their case and the judge acted in accordance with law in granting same.
The court dismissed the application.
Competition – Shareholders agreement – Non-compete clause – Whether a violation of horizontal restraints under the Competition Act
The issue was whether it would be just and equitable to wind up the respondents in terms of s 81(1)(c)(ii) and s 81(d)(iii) read with s 157(1)(d) of the act on the grounds that executive directors of the first respondent unconsciously abused the corporate personality of the second respondent by acting unlawfully. The other issue was whether the minister had locus standi (the right or capacity to bring an action) to bring the application.
The court held that it was just and equitable to wind up a company if the company is conducting unlawful activities and where there is a deadlock between the parties. Further, that s 157 extends locus standi to a broad range of people.
The court found that there were just and equitable grounds to wind up the first respondent because there was a deadlock between the parties, unlawful misappropriation of public funds and non-disclosure. In that light, also wind up the second respondent because its existence depended on that of the first respondent. The court, also, found that the minister, as a member of the executive, had established the necessary locus standi to bring the application in the public interest in terms of s 157(1)(d).
Accordingly, the court granted the final liquidation and ordered that the costs of winding up include costs of the application.
The issue was whether a donation of an interest in a close corporation to the third respondent by the deceased could be declared unlawful and void for lack of consent in terms of s 15(2) and (3) of the Matrimonial Property Act (MPA). Further, if failure to set aside the donation timeously amounted to ratification in terms of s 15(4) of the MPA.
The court held in terms of s 15(4) that consent may be given by way of ratification within a reasonable time. If there was a lack of consent when entering into the transaction, the question is whether objectively, the benefiting party could have reasonably known that consent was required.
The court found that failure of the applicant to institute proceedings timeously does not support the conclusion that it was ratification in terms of s 15(4). The court also found that the conclusion of the transaction lacked the required consent. In that light, objectively, it was not incumbent for the third respondent to investigate the legal character of the deceased's first marriage before she accepted the donation. Therefore, deemed that there was consent in terms of s 15(3).
The court accordingly dismissed the application
The applicant approached the court to set aside the legal opinion and report of the first and second respondents’ respectively and in turn, the respondents challenged the validity of the application before the court.
The court considered whether the applicant was properly incorporated and whether it had locus standi to bring a petition before the court.
It was held that the applicant indeed did not have locus standi to petition the court to challenge the findings of the respondents due to not being properly incorporated.
The court found that the merger between the entities that formed the applicant was in contravention of both the Constitution and legislation regulating companies. The court held that the Constitution was violated on two occasions. Firstly, when an agreement was entered into with an entity controlled by the government without the approval of the Attorney-General. Secondly, when the entity controlled by the government decided to hold a minority shareholding in the company that assisted in incorporating the applicant, which had the effect of parliament not having control of the funds as required. Legislation regulating companies was not complied with since the requirement for incorporating a private company was not observed.
As a result, the preliminary objection raised by the respondents succeeded. The applicant did not exist in law thus it could not sue or be sued. No costs ordered as the applicant does not exist.
The plaintiff registered its business name as ‘Standard Signs Uganda’, and the defendant incorporated as ‘Shandard Signs (Uganda) Limited’. The court considered whether the defendant had infringed on the plaintiff's trademark, was guilty of passing off and the applicable remedies.
The court held that s 6(1) of the Trade Mark Act grants a registered proprietor exclusive rights of use. The legal basis of passing off is that it is wrong for the defendant to represent for trading purposes that his goods are that of the plaintiff. Also, the plaintiff needs to prove that its business had acquired goodwill. If the defendant is passing off goods, the assumption is that the plaintiff is prevented from selling more goods and damages are a reasonable sum of actual loss.
The court found that the difference was only in the letters ‘t’ and ‘h’; in any event the pronunciation of ‘Standard’/’Shandard’ are similar. The other words in the business names are similar or identical, and the logos are also similar. On this basis, the court concluded that the concurrent use of the two registered trade names and logos are likely to confuse; accordingly they infringe on the plaintiff's trademark. Consequently, the defendant's registration of the name was irregular.
The court concluded that the plaintiff had shown that it had acquired goodwill, therefore, misrepresentation was made out. In that regard, had suffered damages because of erroneous belief endangered by the second defendant's misrepresentation.
The court observed that there was no case against the first defendant under the principle of corporate personality.
The court upheld the plaintiff's complaints and awarded damages, a permanent injunction and costs.
This case looked at the whether the veil of incorporation could be lifted and the defendants held liable for the debt of the company as a result of their alleged fraudulent dealings.
The court considered that when the device of incorporation is used for some illegal or improper purpose, the court may disregard the principle that a company is an independent legal entity and lift the veil of corporate identity. A corporate personality can never be used as a cloak or a mask for fraud. The veil of incorporation will be lifted where it is proved that the company is being misused by its directors to perpetuate fraud.
The standard of proof in fraud cases requires a higher degree of probability than the proof required to demonstrate negligence.
The applicant failed to adequately plead the allegation of fraud. Accordingly, the veil of incorporation could not be lifted. The case was dismissed with costs.
This case considered the instance when the veil of incorporation can be lifted. The mind of a company where guilty intent or responsibility is being considered cannot be separated from the minds of the directors. The corporate veil ought to be lifted where there is proof of involvement of the directors in fraud. Once there has been an allegation of fraud against the company, the directors are ay virtue alleged to be involved. Accordingly, the veil of incorporation will be lifted where it is proved that the directors, acting as the mind and body of the company were involved in an act of dishonesty.
The court was called upon to determine the authority of the Uganda Revenue Authority to transfer tax liability and collect money from bankers holding money for alleged offenders under the VAT Act.
The court decided 2 of 5 agreed points of law. Firstly, the court considered whether the defendant's decision to impose and transfer a tax liability of Uganda Shillings 5,553,634,271/= from SureTelecom Uganda Limited to the 1st plaintiff was legal. The court held that the purported transfer of liability from SureTelecom Uganda Limited was unlawful because it infringed the right of the first Plaintiff to be charged and tried before a court of law or an independent tribunal for the offence which the penal tax was imposed. The court agreed with the defendant that it was acceptable for a director of a company to be held liable for the offences of a company in absence of proof that they lacked knowledge of the offence or had tried to stop the commission thereof. However, the court noted that the Commissioner had compounded the offence prior to court proceedings without having an admission from the first plaintiff and thus violated his fundamental right to a fair hearing as envisaged by section 28 of the Constitution. Accordingly, the court found in favour of the first plaintiff. Secondly, the court considered whether the defendant’s act of issuing agency notices to and subsequently collecting USD 800,000 from the 2nd Plaintiff’s bankers in respect of the 1st Plaintiff’s tax liability is lawful or legal. Based on the determination of the previous issue, the court found in favour of both plaintiffs in this issue.
This case looked at the whether the veil of incorporation could be lifted and the defendants held liable for the debt of the company. The court looked at the instances when lifting of the corporate veil was applicable. There are three instances when the veil of incorporation can be lifted. 1) when a court in construing a statute, contract or other documents; 2) when the court is satisfied that the company is a mere façade concealing the true facts and 3) when it is established that the company is an authorized agent of its members/directors.
Further, the veil of incorporation can be lifted when the veil of incorporation is used as an instrument of fraud. The standard of proof required in cases of fraud is more onerous that the ordinary balance of probabilities. Section 20 of the Companies Act (‘the act’) empowers a court to lift the veil of incorporation against directors where there is any involvement in fraud by the directors. Fraud was defined to mean any act of dishonesty or actual fraud.
The court found in this case that the plaintiff was barred from instituting action against the defendants. Accordingly, the claim was dismissed with costs.
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.
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.
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 applicant brought an application for interim order against the respondents disposing of the
suit property fraudulently mortgaged by her husband without spousal consent the same being
matrimonial property. The applicant’s suit was dismissed by the trial court hence the appeal from
which the application arose.
The appellant claimed that he was a partner in a business with the respondent. When the partnership dissolved and the proceeds were shared; the appellant was allegedly not given anything. He then sued the respondent for a declaration that he was a partner and was entitled to the proceeds. The High Court dismissed these claims.
The appellant appealed the judgment of the High Court five months after the judgment had been handed down. He further lodged an application for extension of time to file a notice of appeal. The court below dismissed this application because of inordinate delay.
The appellant appealed to this court. The appellant’s complaint was that the application was dismissed on the basis of technicalities and not substantive justice and this is in contravention of the Constitution. In response, the respondent submitted that the appeal lacks merit.
This court found that the continuation of the proceedings in question would greatly prejudice the respondent. This is because the respondent was holding a decree from the High Court since 1995 which decree the appellant has stubbornly refused to satisfy to date. Accordingly, this application was dismissed.
The case dealt with an application by a decree holder to appoint a receiver to execute a judgment instead of a court broker.
The court held that appointment of a receiver is neither automatic nor a matter of right but is granted where there is no other effective away of executing a debt. The court held that the applicant did not provide reasons as to why a receiver would be able to execute the judgment better than a court broker. The court held that the court broker could be an effective route and hence a receiver should not be appointed. Both a receiver and court broker are accountable to the court so the court broker will be able to execute the debt effectively. Only when the court broker cannot execute effectively, can a receiver who is a disinterested third party be appointed.
The application was rejected.