Commercial Law Index

This case concerned an application for an injunction restraining the respondents from selling or enforcing a mortgage in respect of the applicant’s mortgaged properties, pending the determination of a civil suit. 

A preliminary objection was raised that the second, third, fourth and fifth applicants’ application was not supported by affidavit evidence. The court held that the first applicant’s supporting affidavit and supplementary affidavit would remain intact, and the applicant’s case would survive. Striking out the second to fifth applicants would not do away with the substance of the application.

The grounds for granting an injunction are that the applicant must prove a prima facie case with a likelihood of success; the applicant is likely to suffer irreparable injury that would not be adequately compensated for by damages; and if the court is in doubt it will decide the matter on a balance of convenience. As regards the first ground the court held that there was no prima facie case or serious question to be tried that had the potential of avoiding realization of the outstanding loan amount. This ground was based on whether the contract between the applicant and first respondent was frustrated, in that the applicant was still awaiting payment for the petroleum products sold; the purchase of which was funded by a loan from the respondent. As a result, the applicant contended it could not repay the loan. Evidence showed that there was a delay in payment, and not frustration of contract.

The application for an injunction was dismissed.
 

This was an action claiming monies allegedly siphoned from the plaintiff’s bank account with the participation and/or collusion of the defendant; and damages for the defendant’s breach of the fiduciary duty as branch manager. The defendant filed a counterclaim that his continued suspension and dismissal was unlawful. 

The issues for consideration were whether the defendant caused financial loss to the plaintiff; whether the suspension and/or dismissal was lawful; and the available remedies.

Regarding the first issue, the court held that the suit rested on the allegation that the defendant kept 26 cheques. The court held that it was not proved that the defendant kept the cheques beyond the three days alleged by the plaintiff; however the court found that the defendant knew the cheques were kept beyond the three days. As a result, the defendant was jointly liable with a Mr Patrick Kigongo.

On the second issue, the court held that the plaintiff was entitled to suspend the defendant as he was charged with a criminal offence. Management may dismiss an employee who was facing criminal prosecution if their continued employment would prejudice the interests of the bank. However, the defendant was suspended without pay contrary to regulation 30 of the terms and conditions of service; and the termination was without notice of disciplinary action, without a right of defence, and was thus unlawful.

The plaintiff was awarded general damages. The defendant was awarded his full salary from the date of suspension until the date of termination.
 

The Uganda Land Commission transferred a
parcel of land to the first respondent in 2005,
which leased the land to the second
respondent. In 2006, the appellant wrote to
the Ugandan Land Commission and received
a lease offer for the same land that had
already been transferred to the first
respondent. Both the respondents and the
appellant have been issued a certificate of
title for the same property. In first instance,
the trial judge ruled in favour of the
respondents. The appellant then filed an
appeal.

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.

The court considered whether the petitioner was unable to pay his debts, a bankruptcy order could be granted and whether the petitioner had any properties to be administered by a trustee in bankruptcy.

The court held that a petitioner must prove that he is unable to pay his debts exceeding Uganda Shillings fifty million in terms of Insolvency Act s 3. Further, once a debtor files a petition the court has the jurisdiction to determine the matter as it deems fit and order is granted where the petitioner has filed a statement of affairs with the official receiver in terms of s 4 of the act.

The court found that the petitioner had shown that he was unable to pay his debts by attaching his statements of account. The petitioner also did not file his statement with the official receiver.

Accordingly, the court dismissed the petition.

This was a ruling on an application for a temporary injunction to restrain the respondent from using or trading in goods bearing the applicant’s registered trademark (moon with a logo).

The competitors in this case were in the same industry trading in textile materials and goods under the logos ‘Purple Moon Uganda Limited’ established in Uganda (applicant) and ‘Z moon Purple moon’ established in China (respondent). The court applied the principle of territoriality and held that the applicant was the registered owner of the trademark in dispute and had the right to stop the respondent from using the mark.

The court held that the respondent’s mark was infringing since it was similar in wording (moon) to the applicant’s registered mark in Uganda and was likely to deceive customers in the course of trade.

The court also determined whether the respondent had the capacity (locus standi) to challenge registration of a trademark in Uganda. The court applied the rule that an agent of an owner of a registered mark in a Paris Convention member country had such capacity. The court observed that the respondents were not agents of the two companies that had registered the trademark in China thus lacked capacity.

Accordingly, the court issued the injunction as prayed for and costs of the application subject to the outcome of the main suit.

The plaintiffs sued the defendant for breach of contract.  The first plaintiff claimed US $190,747 for services rendered to the defendant. The second plaintiff claimed US $3,085 being the outstanding balance for provision of services to the defendant before their contract was terminated. The plaintiffs each reached a settlement agreement in which the defendant was going to pay a portion of the claimed amount. 

The plaintiffs later claimed they concluded the first payment under duress, and sought the full amounts originally claimed plus interest. 

The defended raised a defence of res judicata on the grounds that the case was premised on a subject matter which has been previously decided. It produced letters of acknowledgment of full payment.
The court dismissed the res judicata defence on the basis that this was a different case because there were new parties and that the plaintiffs were now seeking interest. However, the court held that there was no evidence of duress and if the plaintiffs were assaulted they should have made a police report. The court ruled that it cannot ignore the letter of acknowledgement of full payment on the grounds that a contract entered by parties should be respected. 

The case was dismissed with costs.
 

The matter arose from a dispute about the detention of goods belonging to the second plaintiff by the defendant. 

The first issue was whether the detention was lawful. Section 214 of the East African Community Customs Act required notice of detention to owners when known. As ownership was not clear, the court observed that notice was not necessary. It also further reasoned that the conduct of the defendant did not amount to seizure as the goods were already in their hands with the knowledge of owners before they were impounded. The court thus held lack of notice did not breach the legislation and therefore not unlawful. 

On whether the goods were wrongfully detained, the court reasoned that the act of holding out representation of title by the second plaintiff and the allegations of fraud was cause for investigation by the defendants and consequent detention pending investigation of ownership. Further, the defendant was legally obliged to hold on to the goods as a lien pending the demand of payment of tax. The detention was therefore lawful. 

Lastly, the court considered whether the MoU entered into by the plaintiffs and defendant was entered into by duress. Citing Pao On v Lau [1979] 3 ALL ER 65 for factors to prove duress, the court noted that the plaintiffs protested and denied indebtedness arising from the memorandum of understanding (MoU) but did not necessarily repudiate immediately or seek redress. It thus reasoned that the actions of the plaintiff did not show duress and therefore held the MoU was entered without duress.
 

This is a case relating to to a contractual dispute where the plaintiff was suing the defendant for breach of contract.

The defendant had been contracted by the Uganda Revenue Authority to construct a border post. The defendant then sub-contracted the plaintiff to perform certain work under three contracts. The plaintiff alleged that the defendant unlawfully terminated one of the contracts after they demanded payment. The defendant contended that it was the plaintiff who unilaterally terminated the contract by halting work at the site resulting in the defendant taking over the work. The defendant further counter-claimed that the plaintiff used some of their equipment and as result the plaintiff owes them compensation.
 
The court held that there were disparities between the plaintiff’s witnesses and that the defendant did not unilaterally terminate the contract. It ruled that the defendant could not be held liable for any sum of money beyond payment for work the plaintiff had actually performed. The court also found that there was no evidence to show that the amount of work done was to a value in excess of what was paid. 

The case was dismissed. The counter-claim was equally dismissed for lack of evidence
 

The dispute emanated from the arrest of the plaintiff’s workers on the instruction of defendant, the National Forestry Authority on allegation of illegally felling trees. This was despite the fact that the plaintiff was licensed to harvest the trees. The plaintiff was forced to pay 150 000 shillings for the tools and logs impounded by the police.

The plaintiff claimed compensation amounting to 3 million shillings for mistreatment, mental health and psychological torture at the hands of the defendant. She further claimed special damages for loss of income. The plaintiff submitted that the defendant breached the license awarded to the plaintiff to harvest abandoned logs

The defendant contended that that the plaintiff breached her license by illegally harvesting timber beyond what was permitted by the license. It argued that the plaintiff’s claim was outrageous in view of the fact that she abandoned the license and that the allegations of mistreatment was frivolous. On special damages, the defended argued that the plaintiff failed to produce evidence to show any loss.

In deciding the matter, the court held that the defendant was in breach of its obligations towards the plaintiff and awarded damages of 3 million shillings for breach of the contract, lost opportunities and inconveniences suffered. The claim for special damages was dismissed.
 

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 defendant procured the services of the plaintiff for upgrades to some of the city’s drainage sites. Following the defendant’s non-payment – pursuant to the issuing of several interim payment certificates by the project manager – the plaintiff terminated the contract, upon which time a final certificate was issued by the project manager for work hitherto completed, in observance of the agreement’s termination procedure. The defendant objected to the payable figures outlined in the final certificate due to its apparent failure to factor in alleged performance anomalies on the part of the plaintiff. The defendant unilaterally reviewed the certificates before issuing a final certificate with a reduced outstanding fee. Establishing which set of certificates was legally enforceable formed the heart of the dispute.

 The court ruled in favour of the plaintiff, finding the defendant’s claims to be substantially impaired on several grounds. The regulations impacting the issue and review of payment certificates came into force after the conclusion of the contract, so general legal principles and the agreement’s terms took precedence in the court’s analysis. The defendant’s unilateral amendment of the final certificate did not accord with the parties’ General Conditions of Contract; it was not delivered to the plaintiff nor agreed to in writing thereby.

 The issuing of final certificates creates a liquid debt – discrepancies ought to have been raised prior to certification and resolved by adjudication or arbitration as per the parties’ agreement. Failing this, the court found that the set-off sought by the plaintiff ought to have been raised in the current suit via counter-claim and not through unilateral adjustment of the final certificate.

 The defendant was found further to have misrepresented a final certificate of completion to the plaintiff, following the project manager’s issuing thereof, and consequently estopped from raising the erroneous conduct of its project manager as a justification for its non-payment. The plaintiff was awarded damages with interest reflecting the conventional rate for commercial banking.

The dispute related to a piece of land that was held by the applicant as tenants in common who thereafter entered into an agreement to sell the land to the respondent. The agreement included terms for initial payment and payment of the balance when handing over the property.

The respondent took possession of the land after paying the balance when he signed the land transfer form. However, the respondent averred that title to the land was never transferred. The appellants contended that the respondent failed to pay the remaining amount so sold it to a third party.

After several delays, the appellant’s lawyers did not appear at trial, and the court heard the matter and entered ex parte judgment in favour of the respondents. The appellants contended that a hearing notice to proceed without the appellants (ex parte) was not served on them.

The Court of Appeal held that an ex parte judgment can only be set aside if there is a sufficient cause and the failure to serve the notice for hearing is not one of the grounds for setting aside the ex parte judgment. The court held that the ex parte judgment could not be set aside.

The dispute related to a piece of land that was held by the applicant as tenants in common who thereafter entered into an agreement to sell the land to the respondent. The agreement included terms for initial payment and payment of the balance when handing over the property.

The respondent took possession of the land after paying the balance when he signed the land transfer form. However, the respondent averred that title to the land was never transferred. The appellants contended that the respondent failed to pay the remaining amount so sold it to a third party.

After several delays, the appellant’s lawyers did not appear at trial, and the court heard the matter and entered ex parte judgment in favour of the respondents. The appellants contended that a hearing notice to proceed without the appellants (ex parte) was not served on them.

The Court of Appeal held that an ex parte judgment can only be set aside if there is a sufficient cause and the failure to serve the notice for hearing is not one of the grounds for setting aside the ex parte judgment. The court held that the ex parte judgment could not be set aside.

The matter involved a dispute over the charging of taxes on the plaintiff on imports of sugar under a duty-free license. 

The main issue was whether the sugar was imported after expiry of the six-month license. The court considered the definition of ‘import’ in the East African Community Customs Management Act (EACCMA) and established that since importation was allowed under East African Community Law the definition covered bringing of the goods into a Partner State. It also looked at the time of importation in the act which it gave as the point at which the goods come within the boundaries of the Partner States. Having looked at the powers that enabled the granting of the licenses to import by the Minister of Trade, Industry and Co-operatives as being sourced from East African Community law, the court thus reached that the goods had been imported within the period of granting of the license when they arrived in Mombasa in October 2011. Since the sugar in question was imported within time it was concluded to have been part of the sugar exempted from customs duty by East African Community law. Held the assessment for import duty of the plaintiff by the defendant was wrongful.

The court thus allowed for a refund of duties charged on sugar sold within Uganda with interest costs but denied all other damages arising from goods re-exported to other countries on the reasoning that the re-exports contravened the terms of the license.