Commercial Law Index

The defendant had rejected a claim of a certain amount as allowable tax deductions by the plaintiff. This case reconciles the different calculations for bad debts used according to the Financial Institution Act and the 2005 regulations on the other hand the Income Tax Act (ITA) International Financial Reporting Standards (IFRS). 

The court considered whether the assessment followed by the defendant was unlawful.

The court held that it was not required to determine which methodology was more consistent with the ITA section 24. The rationale for accounting methods should not depart from what is provided under the ITA, which is the parent act. Therefore, the definition of a bad debt should be based on the ITA under. The court considered the practice note which had the interpretation of the Commissioner General and held that section 160 of the ITA must be followed because the practice note is only binding on the Commissioner General and her personnel. The court held that section 24 deals with deductions of bad debts and the conditions to be fulfilled for deduction must apply. Thus, the court held that a bad debt under section is allowable as a deduction under section 24.

The court held that the plaintiff was obliged to make provision for bad debts which meet the criteria under section 24 of the ITA and the practice note issued by the Commissioner, file accounts with the Bank of Uganda and be up to standard under the IFRS.

The court also considered whether the plaintiff had to comply with the Bank of Uganda Circular that regulated deductibility of bad debts for income tax. The court held that the circular was not binding because it does not deal with whether a bad debt is an allowable deduction or not.

The court was satisfied that the above sum was a bad debt that is supposed to be an allowable deduction under section 22 and 24 of the ITA.
 

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.

This was an application seeking orders for an interim stay of execution and/or enforcement of the decree and judgment of a civil suit pending the hearing and determination of the application; on grounds that there was a prima facie case on appeal and its essentiality for safeguarding the applicant’s right to appeal.

The respondents raised a preliminary objection to the application on grounds that it was not properly before the court. The court observed that it was more ideal for the High Court to first determine such applications on their own merits and for the Court of Appeal to do so only when the application is substantive in content and form and in special and rare circumstances: if the High Court refuses to accept its jurisdiction, or refuses jurisdiction on wrong reasons, or there is great delay.

The court was satisfied that the applicant failed to demonstrate special or rare circumstances for not making this application in the High Court first since there was no evidence of a formal application for stay or a follow up letter on the application. Accordingly, the court allowed the preliminary objection by counsel for the respondent and dismissed the application with an order to costs.

The court considered whether the applicant had sufficient grounds for an interlocutory injunction to prevent the first respondent from entering into another contract.

The court held that there are three conditions that an applicant must show for a temporary interlocutory injunction. Firstly, must show that there is a prima facie case with a probability of success. Secondly, must show that he will suffer irreparable harm which will not be adequately compensated by an award for damages. Thirdly, the application is decided on a balance of convenience if the court is in doubt.

The court found that to establish a prima facie case the applicant must show that it is not a frivolous case, in that regard, the applicant did not show that there was a triable issue. Also found that irreparable harm must be substantial or material, in that light the applicant did not the likelihood of irreparable damages and any contemplated damages. The court also found that the balance of convenience was in favour of the respondent because if the injunction because the granting of the injunction would lead to indefinite termination.

Accordingly, the court dismissed the application with costs.

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 court considered an application where the applicant argued that the Court of Appeal, in an earlier judgment in the same case, erroneously misconstrued s 272 of the Succession Act. The court held that an appeal could be re-heard if the matter is of great public importance. The court confirmed that great public importance and general importance depends on the facts and circumstances and may vary from case-to-case. 

The guidelines for what would constitute public or general importance in certain cases are statements of law which affect 

(1) a considerable number of people in their commercial practice; 
(2) enjoyment of fundamental rights; 
(3) the proper functioning of public institutions; 
(4) the court’s scope to dispense redress; or (4) the discharge of duties of public officers. 

If an appeal meets one of the criteria constituting public or general importance, the court will be permitted to re-hear an appeal on its merits. The court in this case held that this case raised a question of law of general importance and could be reheard.
 

The applicant and respondent contested in a parliamentary election, the
respondent was aggrieved by the outcome of the election petitioned court
which dismissed the petition hence the appeal from which the application
arises. The applicant sought the notice of appeal struck out of court for being
filed out of time without leave of court.