Commercial Law Index

This was an appeal from decision of the Court of Appeal on grounds that;

The Justices of Appeal erred in law and fact when they granted orders for
cancellation of the fifth appellant’s title to the suit property which was neither
sought nor pleaded by the respondents, thereby occasioning miscarriage of
justice.

The matter involved an application for the setting aside of an order for default judgment and the order of execution of the default decree. It also involved an application for unconditional leave to defend the underlying suit that gave rise to the default judgment.

Substantively, the first issue was whether the applicant had been aware of the summons to defend the suit for the amount claimed. It was established that there was a serious flaw in the service by respondents particularly in the absence of a return of service summons. There was therefore no evidence of summons or a court order being served to the applicant on the court record and the application for leave to defend outside the stipulated timeframe could not be said to be in breach of a court order. Further, it was also held that the absence of effective summons justified the setting aside of the default decree.

Secondly, there was a question of the legality of the suit brought against the appellant for default as it was argued that the basis was an illegal instrument. As there was an argument that the cheque and acknowledgement the suit was based on were forged, the court reasoned that there was no difference between the signature on the cheque and on the acknowledgment. However, as there was no forensic evidence supporting this, the court offered the applicant conditional leave to defend the underlying suit against him. The court therefore concluded under a conditional pretext of the suit’s illegality and thus allowed the application for conditional leave to defend.

The applicant instituted a civil suit against the respondent in 2013 in a lower court. This suit was in relation to a consulting and ICT support services fees provided by the applicant for the respondent. With the applicant having not taken any step to prosecute the matter since 2013, the respondent applied to have the suit dismissed for want of prosecution. The court accordingly dismissed the suit. 

In this court, the applicant sought an order to reinstate this civil suit and set aside the dismissal. The respondent contended that the applicant’s failure to take steps to prosecute the suit against the respondent for over three years, was justification for dismissal of want of prosecution. Furthermore, the applicant had not shown any justification for failure to take these requisite steps.

The respondent thus claimed that this application would prejudice him as he had been burdened by the suit since 2013. 

This court held that the reinstatement of this civil suit would indeed prejudice the respondent. The application was dismissed on the grounds that it defeats the defence of limitation (as the claim or suit proceeded out of time) available to the respondent.
 

The plaintiff supplier sued the defendant – its Local Technical Representative (LTR) in accordance with the National Drug Authority Act for the distribution of pharmaceutical products – for breach of contract. The defendant failed to pay the plaintiff for the assorted products it supplied. The plaintiff consequently claimed for loss of income, damages, interest and costs of suit. The defendant lodged a counter-claim alleging that the plaintiff/first counter-defendant had breached the memorandum of understanding concluded between the parties and had, through various means, attempted to cripple the defendant’s/counter-claimant’s enterprise. It alleged further, as the basis of its challenge to the legality of the arrangement between the first and second counter-defendants, that the just-mentioned parties had colluded in this endeavour so as allow the latter to become the new LTR. 

The defendants/counter-claimants successfully raised the procedural bar of res judicata – which prohibits judicially-decided matters from being heard afresh a second time – concerning the plaintiff’s claim, given that the matter of their indebtedness thereto had been resolved in the settlement of antecedent winding-up proceedings. To what extent ought the defendant’s/counter-claimant’s challenge have been raised as part of the previous lawsuit? Suggesting that res judicata was applicable to both parties’ claims, the court nevertheless considered the counter-claimant’s’ case in respect of the first and second counter-defendants and found no measure of illegality or bad faith on the evidence. The counter-claimant was additionally time-barred from seeking review of the National Drug Authority’s decision over the LTR change. 

The plaintiff’s suit and defendants’ counter-claims were accordingly dismissed with costs.
 

The issues before the court were whether the registrar erred in law when he did not exercise his jurisdiction to refer the matter to a judge for a final disposal of issues he had found as contentious in his ruling; whether the learned registrar erred in law when he unilaterally dismissed the matter without determining the contentious issues raised therein and whether it is in the interest of justice that the appellant is granted leave to tax its Advocate-Client Bill of Costs.

The court stated that the claims did not arise out of a single transaction and the best way forward for the applicant was to file an action (civil suit) to recover these various claims.

The court came to the conclusion that the application was for recovery of costs and the registrar had no jurisdiction to entertain a dispute between advocate and client as to whether costs or fees were due. Secondly it is alleged that the bill is illegal or arises from an illegal contract. The court upheld the registrar’s decision not to entertain the bill and refer the parties to a suit with the only question remaining of whether he ought to have referred the parties to the judge for trial of the suit. The court reiterated that the registrar reached the right conclusion.
The matter of recovery of costs was contentious and the registrar had no jurisdiction to entertain it. 

The court dismissed the appeal.
 

In this case the applicant wanted a writ of mandamus to compel the first respondent to pay the outstanding amounts with interest as ordered from the High Court. This case emphasizes that there must be a clear right in order to use a mandamus.

The court held that in order to obtain a writ of mandamus the following must be established: (1) a clear legal right and a corresponding duty in the respondent; (2) that some specific act or thing which the law requires that particular officer to do has been omitted to be done by him; (3) lack of any alternative, and (4) whether the alternative remedy exists but is inconvenient, less beneficial or less effective or totally ineffective.

The rights of the party seeking the writ of mandamus must not be doubtable. The court was not satisfied that the issues regarding the interest to be awarded and the amount due where properly determined. The court found that the applicant’s rights were doubtable. The court dismissed the application and advised the parties to seek an appropriate intervention to give proper interpretation of the trial judge’s judgment.

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.

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 plaintiff instituted an action against the defendant to recover a sum of money owed to the plaintiff for the construction of a television complex constructed by the plaintiff on the defendant’s premises. The defendant submitted a counterclaim. 

The court was faced with a number of issues to resolve, namely: whether the deed of variation entered into by the parties was void for illegality; whether the plaintiff breached he contract; whether the plaintiff is entitled to any remedies and whether the defendant is entitled to their counter claim. 

The court held that (i) the deed of variation was enforceable; (ii) the plaintiff was not in breach of contract; (iii) the counter claim by the defendant must fail and that the plaintiff was entitled to remedies for the sum withheld. 

The court relied on existing legislation to distinguish between variation and amendment- the former dealt with changes in the contract relating to the price, completion date or statement of requirements of the contract and the latter related to changes in terms and conditions of the awarded contract. The court relied on witness testimonies from which it determined that the plaintiff was not in breach of contract. 

The defendant’s counterclaim was dismissed, and the plaintiff awarded Shs 749,884,386 being the money owed to it by the defendant. Interest was set at 19% p.a. Costs were ordered in favour of plaintiff.
 

The issue was whether an arbitrator has power to amend a contract.

The applicant was challenging an arbitral decision arguing that the composition of the arbitration tribunal and the award itself were wrong. It argued that the arbitrator dealt with an issue which was not contemplated by the parties and that he amended the subject contract in contravention of clause 10 of the contract. The applicant further alleged that the conduct of the arbitrator showed bias in favor of the respondents.

The respondent on the other hand argued that there was no evidence to show that the arbitrator was partial. They further contended that there was no contravention of clause 10 because the amendments were made in terms of clause 13 of contract.

In deciding the case, the court held that amendments to the contract cannot be made without consensus of each party. It ruled that an amendment in terms of clause 13 required an arbitrator appointed in accordance with that provision. It further held that the clause 10.2 of the contract only allowed an amendment by agreement in writing by both parties which was not the case in the matter before the court. 

On allegations of partiality of the arbitrator, the court found that communication between the applicant and respondent shows likelihood of bias. The court further ruled that the composition of the tribunal was not in accordance with the contract. All these amounted to breach of the Arbitration and Conciliation Act. The arbitration award was set aside.
 

The issue was whether a failure to comply with court rules directing a witness to file statements in time affects the litigation process.
The plaintiff claimed US $14,000 being money paid to the defendant for an apartment. The plaintiff rescinded the agreement and claimed a refund. The defendants raised an objection to one of witness statements arguing that it was filed out of time limits set by court rules. The defendants’ objection was based on the grounds that admitting the statement was prejudicial to the defendant’s case.

The plaintiff opposed the preliminary objection arguing that statement was filed to expedite the hearing rather than to leave the witness out of court, and the witness’ statement was not part of civil procedure. The plaintiff argued that there was no prejudice caused because the statement was not different substantially from the one submitted by the plaintiff.

The court held that rule 6(4) of the Constitution (Commercial Court) Practice Directions sets time limits that should be adhered to; extensions should be granted in special circumstances. It ruled that in the interest of justice the plaintiff’s witness should be heard and must be granted leave to file the witness statement out of time.