Court name
Commercial Court of Uganda
Case number
Miscellaneous Application 646 of 2010
Judgment date
18 November 2010

Shell (U) Ltd. & 9 Ors. v Rock Petroleum & (U) Ltd. & 2 Ors (Misc. Appl. No. 646 Of 2010 ) (Miscellaneous Application 646 of 2010) [2010] UGCommC 37 (18 November 2010);

Cite this case
[2010] UGCommC 37


{Arising from Miscellaneous Application No. 645 of 2010 and Miscellaneous Applications No. 622 &

625 of 2010}

1.       SHELL (U) LTD                               }
2.       KOBIL (U) LTD                               }
3.       GAPCO (U) LTD                               }
4.       MGS INTERNATIONAL (U) LTD        }
5.       DELTA PETROLEUM LTD               }
6.       FUELEX (U) LTD                              }:::::::::::::::::::::::APPLICANTS
7.       CITY OIL LTD                                }
8.       HASS PETROLEUM LTD                }
9.       NILE ENERGY LTD                    }
10.      PETRO LINK (U) LTD                         }


1.       ROCK PETROLEUM (U) LTD            }
2.       UGANDA REVENUE AUTHORITY         }:::::::::::::::::::RESPONDENTS
3.       M/S MUWEMA & MUGERWA              }


The applicants brought this application under the provisions of s.62 (5) of the Advocates Act, s.98 of the Civil Procedure Act (CPA) and Order 52 rules 1 and 3 of the Civil Procedure Rules. They sought for an order to stay execution of the orders arising from the ruling of the Deputy Registrar, charging the proceeds of a judgment that were due to the applicants, among others, pending the hearing of an appeal filed as Misc. Application No. 645 of 2010. They also sought for the costs of the application.

The grounds of the application were contained in the notice of motion and were more particularly set out in the affidavits in support which were deposed on 17/11/2010 by Mr. Tom Magezi, an Advocate practicing with M/s Tumusiime, Kabega & Co., Advocates, who represented the applicants, and on 19/11/2010 by Stephen Chomi, the Head of Legal Affairs with the 1st applicant.

The salient grounds that were stated in the applicants’ motion were that they had lodged an appeal in this court against the decision of the Deputy Registrar in Misc. Application No. 622 of 2010, which had a high likelihood of success. That if execution of the orders was not stayed the applicants would suffer the loss of over shs 8 billion in fees taken out of the proceeds of a judgment in a suit that they had obtained in this court, which were to be paid to the 3rd respondent firm.

In his affidavit Mr. Magezi deposed that he was one of the advocates representing the applicants in the appeal and therefore conversant with the matters pertaining to the appeal and the application. Further that he was authorized by the applicants to so make the deposition. Mr. Magezi further deposed that the respondents were intent on executing the orders of the Deputy Registrar before the determination of the appeal yet the appeal had a high likelihood of success. A copy of that application was annexed to the affidavit as Annexure. He further deposed that if stay of execution was not issued, the applicants would be gravely prejudiced and if they were successful in the appeal it would be rendered nugatory. Further that the applicants had the capacity to effect performance of any orders that may be made in case the appeal goes against them. That it was therefore in the interests of justice and fairness that the application be granted pending the determination of the appeal.

The respondents did not file any affidavit in reply to the application though they were duly served and affidavits of service filed in court. The application therefore proceeded ex parte in the manner that I will explain later on in this ruling. But before I go on to address the issues in the application it is important that I set out the background from which it arose.

The 1st respondent herein and over 50 other companies are supplies of petroleum products in Uganda. They filed O.S 009 of 2009 against Uganda Revenue Authority (URA) for the recovery of taxes (Excise Duty) that had wrongly been collected from them following an order made by the Minister under the Taxes and Duties (Provisional Collection) Act, but which had expired. In the suit which was brought as a representative action, the 1st respondent represented the petroleum companies under an order that was granted to him by this court on the 7/04/2009, while the 3rd respondents were his advocates.

The suit was successful and judgment was delivered by my brother Mukasa, J., on the 20/07/2010. In his judgment he ordered that URA makes an account to court of all monies that had been collected from the plaintiffs in excess of what was due from them and refund it to them. He also ordered that URA file in court an account of the monies collected in excess from the plaintiffs. Costs of the suit were to be paid by URA. Pursuant to the order, on the 12/08/2009 URA filed an account that showed that the amount due to over 50 petroleum suppliers operating in Uganda was shs 56,184,191,050/=.

Unbeknown to the applicants herein, the 3rd respondent had entered into an agreement for the payment of fees with the 1st respondent as the representative of all the suppliers of petroleum products in Uganda. In the agreement which was dated 1/08/2009 it was agreed that the Advocates (the 3rd respondents herein) would be entitled to costs of the suit and an additional fee equivalent to 16% of the proceeds of the clients’ claims, whatever the total sums of the claim that the court finally awarded or decreed to be due to the clients. That in the event that the recovery process was protracted by an appeal the advocates would be entitled to a further 4% of the total claim. It was also stated in the agreement that each of the parties to the suit, that is all the petroleum suppliers in Uganda that had the excise duty collected from them, would be irrevocably, jointly and severally bound by the agreement.

On 2/09/2010 the 3rd respondent firm demanded payment of the fees agreed upon with the 1st respondent from URA but the authority refused or ignored to pay the amount of shs 56, 184,191,050/= which they claimed. The 3rd respondent then filed Misc. Application No. 622 of 2010 under the provisions of s.61 of the Advocates Act and rules 4 and 5 of the (Advocates Remuneration & Taxation of Costs) Rules. They sought for an order to have the fees agreed upon with the 1st respondent charged upon and paid wholly from the monies held by URA on account of refunds to all the petroleum suppliers.

A ruling on the application was delivered by the Deputy Registrar of this court on 15/11/2010 and the resultant order was on the same day served upon URA. The applicants herein being 10 of the petroleum companies, some of who had the biggest amounts of money owing on account of refunds from URA, were aggrieved by the order of the Deputy Registrar. Therefore, on 17/11/2010 they filed an appeal against the ruling and orders as Miscellaneous Application No. 645 of 2010. They also filed the instant application for stay of execution of the same orders. On the 17/11/2010, I issued an interim order for stay of execution in this application under the provisions of s.98 CPA to prevent URA from paying the fees demanded by the 3rd respondent. The application was then fixed for hearing as soon as was practically possible (i.e. on 19/11/2010) because the interim order to stay execution was granted ex parte.

On the 18/11/2010, the 3rd respondent lodged a notice of appeal in this court stating that they would be appealing against the interim order for stay of execution which I issued on the 17/11/2010. I suppose the notice of appeal was meant to stop me from proceeding with the hearing of this application. However, the order that I issued on 17/11/2010 was not a final order. It was meant to expire today whether the order sought for in this application was granted or not.

Notice of this application was served upon the 3rd respondent who is still counsel for the 1st respondent. The 2nd respondent was served through its Assistant Commissioner for Litigation, Mr. Kazibwe. The affidavits of Mr. Ojambo Makoha, a clerk in this court sworn on 18/11/2010 and Mr. Musisi Stephen, a process server of this court sworn on the same day, are testimony to that fact. In spite of that the respondents all chose not to file affidavits in reply to the application.

When the application was called on for hearing on 19/11/2010, Mr. Siraji Ali and Brain Kibaiza appeared to represent the 1st and 3rd respondents. The applicants were represented by Mr. Enos Tumusiime of M/s Tumusiime, Kabega & Co. Advocates, Mr. Byrd Ssebuliba of Shonubi, Musoke & Co., Advocates and Mr. Cephas Birungi of Birungi, Barata & Associates. Before Mr. Tumusiime could address me on the application, Mr. Siraji Ali on behalf of the 3rd and 1st respondents interjected and asked to give court some information. He then said that he had instructions to inform court that the Assistant Registrar of the Court of Appeal had issued an interim order in a Misc. Application that was before that Court, in which he ordered that all proceedings in M/A 645 and 646 of 2010 be stayed.

I had seen the order before that because it was filed in court on the same day just before court was due to sit. It was stated to have been issued in Misc. Application No. 194 of 2010 and was dated 18/11/2010. My attention had also been drawn to my copy of a letter dated 19/11/2010, addressed to the Principle Judge, complaining about me as a judicial officer. In the letter, which was signed by Mr. Fred Muwema and Mr. Hebert Kiggundu Mugerwa, both partners in the 3rd respondent firm, the gentlemen complained that I was biased when I entertained an application for an interim order for stay of execution ex parte. The two gentlemen stated:

“Coincidentally, we have learnt that one of the lawyers, Mr. Allan Shonubi enjoyed a landlord/tenant relationship with her (Judge Mulyagonja) whilst she practiced under the name of M/s Kakooza Kawuma and Company Advocates (sic). Based on the judge’s obvious partiality we have reasonable belief that the said relationship has influenced her conduct as a judicial officer.”

I perused the Judicial Code of Conduct for the Uganda Judiciary (2003). I do not deny that the firm where I practiced before I was appointed a Judge did occupy premises in a building owned by Mr. Allan Shonuibi. However, I could not say that the relationship between Mr. Shonubi and I, as a partner in the firm of Kakooza & Kawuma Advocates, as tenants, in any way influenced my decision to issue the order of 17/11/2010. In any event, the relationship of landlord and tenant does not fall under those that are prohibited under the 2nd principle in the Uganda Judicial Code of Conduct. A judicial officer is only under the strict obligation to disqualify himself/herself in the circumstances specified in clauses 2.4.1 and 2.4.2. It is there provided that a judicial officer shall disqualify himself or herself from participating in proceedings where she/he has personal knowledge of the disputed facts concerning the proceedings, or where a member of the judicial officer’s family is representing a litigant, is a party, or has interest in the outcome of the matter in controversy, in the proceedings.

Though M/s Kakooza & Kawuma, Advocates were tenants in Mr. Shonubi’s building, that relationship could not by any stretch of the imagination make the partners therein his relatives in any degree. Neither did I have any prior or personal knowledge of the disputed facts in the appeal or in this application. It is therefore my humble view that clauses 2.4.1 and 2.4.2 of the Uganda Judicial Code of Conduct did not apply to the situation at hand. I therefore went on to entertain the application which, in my view, was of great public significance given the persistent reports that Advocates in Uganda have formed the unbecoming habit of entering into champertous agreements for their fees. The agreements have caused loss to many litigants, some of whom are very vulnerable and ignorant of the law and thus brought the legal profession into ridicule and disrepute.

When Mr. Ali and Mr. Kabaiza appeared before me at the hearing of the application they did not raise the issue of bias. I therefore did not mention it in the record of proceedings. Instead, Mr. Ali said that the reason why they filed M/A No. 194 of 2010 in the Court of Appeal was because the issues in this application and M/A No. 245 of 2010 (the appeal which is pending hearing) were the same as those in M/A 625 of 2010 which the Deputy Registrar heard on the same day as M/A 622 of 2010 and in respect of which a ruling had not yet been delivered. That as a result, there were two matters before the same court with the same issues and between the same parties. He further submitted that entertaining this application and the appeal before court would result in contravention of ss. 5 and 6 of the Civil Procedure Act. I will return to the question whether M/A 645 of 2010 is prohibited by the provisions of s. 5 and/or s.6 of the CPA in a short while.

I was amazed at the fact that the learned Registrar of the Court of Appeal deigned to entertain an application to stay these proceedings. I say so because staying all the proceedings before this court before it was functus officio would only serve to further delay the 3rd respondent firm from achieving its partners’ goal of executing the order that was granted in their favour by the Deputy Registrar of this court on 15/11/2010.

Going back to the question raised by Mr. Siraji Ali, which he said was then before the Court of Appeal in Misc. Application No. 194 of 2010, it is pertinent to point out that in M/A 625/2010 the applicants herein, represented by the same advocates representing them here, sought for orders that they be joined as plaintiffs/parties in the main suit. They also sought for a declaration that the private agreement between the 1st respondent and the 3rd respondent is not binding on all the applicants or any other person not party to it. Further that the 2nd respondent therein (URA) do pay the applicants according to their directives and the judgment and orders of Justice Mukasa in O.S. 009 of 2010, as well as for the costs of that application.

To my mind, that application (Misc. Application 625/2010) appears to have been overtaken by events. This is because the Learned Deputy Registrar deemed it fit to first dispose of the substantive issues in M/A 622/2010, i.e. the enforcement of the contingent fee agreement between the 1st and 3rd respondentsagainst the 2nd respondents herein, before resolving the issues raised in Misc. Application No. 625/2010 by the applicants who opposed the fee agreement and desired that the court opens it up to verify its legal validity. As a result, it is my view that the answers to the 2nd and 3rd prayers which were most crucial for determination in M/A 625/2010 could not reasonably be answered in any other way by the same judicial officer than she answered them in M/A 622/2010.

In my view, the decision on the 1st prayer in Misc. Application 625/2010, i.e. that the applicants herein be joined as parties to O.S 009/2009 also seems to have been answered by the Learned Deputy Registrar in her ruling in M/A 622/2010; because she seems to have implied that the representative order could not be opened to allow the applicants herein to be joined as substantive parties during the process of execution of the judgment in O.S 009 of 2010 when she ruled as follows: -

“I therefore conclude that on the basis of the above findings and the above court order to charge the agreement for the recovered excise duty, the respondent cannot entertain the singly brought claims by other law firms to defeat the charge, as it is barred by section 61 of the Act, already reproduced earlier in this ruling. The respondent is now bound to the charge as court has ordered.”

I am therefore of the opinion that the complaints raised by the 3rd respondents in M/A 194/2010 now before the Court of Appeal do not hold any water because the questions that were raised in M/A 625/2010 are no longer in issue in any pending suit or application in this court. If they were, they were conveniently overtaken by the decision of the Deputy Registrar that ordered the 2nd respondent to pay the monies that the 3rd respondent claimed under their remuneration agreement. It was for the reasons above that I was not deterred from proceeding to hear this application either because the 3rd respondent firm’s intended to appeal and/or by His Worship Nizeyimana’s order staying these proceedings. In any event the intended appeal is without any doubt in my mind premature and incompetent and I will explain.

The interim order that the 3rd respondent intended to appeal against was issued under the provisions of s.98 CPA. I perused s.76 of the CPA and found that orders made under s.98 CPA are not included among those that can be appealed against as of right. Moreover, s.77 of the CPA provides that except as otherwise expressly provided in the Act, no appeal shall lie from any order made by a court in the exercise of its original or appellate jurisdiction. I also considered the provisions of Order 44 of the CPR which provides for appeals from orders under the rules and I found none that commended itself to me as applying to the situation at hand. If the respondents wanted to appeal against my order of 17/11/2010, they had first to seek leave from this court to appeal which they did not do. I also highly doubt that they obtained the leave of the Court of Appeal to Appeal from the contested order.

Moreover, the Supreme Court held in the case of Charles Harry Twagira v. Uganda, S/C Criminal Application No. 3 0f 2003 (Tsekoko, JSC sitting as a single Judge) that for purposes of appeals, the word “judgment” gets its interpretation from Article 257 (o) of the Constitution which provides that “judgment includes a decision, an order or decree of a court. He went to state that the said interpretation means that only final orders of the courts can be appeal from but not discretionary orders or rulings on interlocutory matters. A similar decision had before that been made by Manyindo, DCJ (as he then was) in the case Incafex Ltd v. James Kabatereine C/A Civil Misc Application No. 16 of 1997 where he ruled as follows:

“Orders that are appealable as of right are spelt out in Order 40(1) rule (1) of the CPR. These do not include an order staying execution of a decree. Under Order 40(1) (2) an appeal may not lie from orders not covered under Order 40(1) (I) except with leave of the trial Court or the Court to which the appeal would lie if leave were granted. Under Order 40(1) (3) the application for leave to appeal shall in the first instance be made to the trial Court and it has to be made by motion on Notice. This is the procedure the respondent had to follow before bringing his appeal since the order appealed from is not appealable as of right. He did not.
It follows that his appeal is incompetent. This application to strike it out has merit. It is allowed. The respondent’s appeal is struck out as incompetent.”

The decisions that I have cited above confirmed to me that not only did the 3rd respondents have to seek leave of this court before they purported to file a notice to appeal against the interim order that I issued on 17/11/2010, but that they will also have to seek leave before they can appeal from the orders that will be made in this application. I therefore went on and entertained the application that was before me in spite of the order to stay the proceedings and the notice of appeal.

In his submissions, Mr. Tumusiime stated that the applicants were dissatisfied with the orders in M/A 622/2010 and had appealed against it. In particular that the applicants were dissatisfied with the orders of the Registrar because she had not delivered the ruling in M/A 625 of 2010 in which the applicants sought to challenge the fee agreement between the 1st and 3rd respondents herein. Further that the contested fee agreement was illegal because it offends against the provisions of ss. 50, 52, 55 (1) (b), and ss.61 and 62 of the Advocates Act. He also drew courts attention to rule 26 of the Advocates (Professional Conduct) Regulations and said the contested agreement offended that provision as well. That as a result, the appeal against the registrar’s orders had a very high probability of success.

Mr. Tumusiime further submitted that by the facts stated in the affidavit of Mr. Chomi the 1st applicant company was at the risk of losing colossal sums of money (i.e. shs. 1,200,000,000/=) if the execution of the Registrar’s orders is allowed to go on. That put together, all the oil companies affected by the orders in O.S 009 of 2009 would lose shs. 8.9 billion. He went on to cite several decisions of the courts on applications for stay of execution pending appeal but the leading decision was that in Mangungu v. National Bank of Commerce [2007] 2 EA 285 where the court of Appeal of Tanzania set out the criteria for determining applications for stay of execution pending appeal. He also referred to the decisions in Mugenyi & Co. Advocates v. National Insurance Corporation, C/A Civil Appeal No. 13/84; Peter Mulira v. Mitchell Cotts, Misc. Application No. 715 of 2009, L. Nsubuga Membe v. Fabiano Mayoga, HCMA, 632 of 2007, and finally URA v. Muwema & Mugerwa Advocates & Solicitors, HCMA 349 of 2008.

Mr. Tumusiime went on to submit that by the facts raised in the affidavits in support of their application the applicants here had satisfied the conditions that were laid down in Mangungu v. National Bank of Commerce (supra) in order to justify an order to stay execution as follows:-

That the pending appeal, prima facie, had a likelihood of success as was highlighted in the case of Mugenyi & Co. v. NIC (supra), according to the decision of Wambuzi, CJ, (as he then was). Also that the order for stay of execution, if granted, was not likely to cause any hardship to the 3rd respondent and a little waiting for the money claimed would only cost them patience as was held in the previous case of Muwema & Mugerwa, Advocates (supra). That the monies that were demanded by the 3rd respondent according to their fee agreement were colossal and to be drawn from public funds and therefore a little waiting would not cause any substantial injustice. Finally, that on the balance of convenience, the 3rd respondent would not lose anything, but if the 2nd respondent were forced to part with the money according to the Registrar’s order, the persons affected by the judgment and orders in O.S. 009 of 2009 would lose colossal sums of money which could go up to the tune of UGX 8.9 billion. Mr. Tumusiime finally prayed that the application be granted with costs certified for three counsels.

It has long been established in this jurisdiction that there are three conditions for the determination of applications for stay of execution as crystallized from the provisions of Order 43 of the CPR. (Refer to Sewankambo Dickson v. Ziwa Abby, H.C. M/A (CC) 178/2005; Joseph Owoko v. Edward Mugalu [1976] HCB, 358). They are that
substantial loss may result to the Applicant unless the order to stay execution is made;
b)       the application has been made without unreasonable delay; and finally;
c)       that security for costs has been given by the Applicant.
However, this application was not brought under the provisions of Order 43 CPR but under the provisions of s.98 CPA. In that regard it has been held in a countless number of authorities that this court has inherent powers to stay execution. What needs to be determined is whether there are any tests that have to be applied to the facts before the court grants the order. In National Union of Clerical Workers & Technical Employees v. National Insurance Corporation, S/C C/A No. 7 of 1997, it was held that the question whether the court should invoke its inherent powers in a given case is a matter of the courts discretion, to be exercised judicially and the availability of an alternative remedy or specific provision is only one of the factors to be taken into account, but it does not limit or remove the court’s jurisdiction. This was also held in URA v. Muwema & Mugerwa (supra) which has been cited here, and in which Arach Amoko, J (as she then was) relied on several of the decisions that have been cited by Mr Tumusiime.
The facts in the previous matter between the 2nd and 3rd respondents were very similar to those in this matter, though it is not the 2nd respondent that is now dissatisfied by the order of the Registrar but other plaintiffs in the suit. Similar to the previous suit, there is an appeal pending in this court over a decision of the Deputy Registrar and that decision needs to be looked into in order to satisfy the applicants here that the agreement on which the 3rd respondent relies to collect fees from them is a valid legal and binding agreement. I agree with the submission that the main purpose for an order to stay execution pending an appeal is to preserve the subject matter in dispute so that the rights of the appellant or appellants who, in my view seem to be exercising a valid legal right of appeal against the order though they were not party to the application, are determined.
The applicants in this application draw their right to appeal from the orders of the Deputy Registrar from the provisions of s. 50 (3) of the Advocates Act because they are, without a doubt, companies that fall within the provisions thereof which are as follows:
(3) No suit shall be brought upon any such agreement, but the court may, on the application of any person who is a party to, or the representative of a party to, the agreement, or who is, or who is alleged to be liable to pay, or who is or claims to be entitled to be paid, the costs due or alleged to be due in respect of the business to which the agreement relates, enforce or set aside the agreement and determine every question as to the validity or effect of the agreement.

It is important that I reiterate the fact that although they were not party to M/A 622/2010 the orders made in that application by the Deputy Registrar disposed of their prayers in M/A 625/2010. The decision in Msc. Application No. 625/2010, if it is ever made, will therefore be no different from the decision in Misc. Application No. 622 of 2010, yet the attempt to have the two applications consolidated fell by the way side and the learned Deputy Registrar thus arrived at her decision without first hearing the applicant’s complaints about the fee agreement. It is most unfortunate that the quest to consolidate the two applications was not successful and that is what led to the contested decision in Misc. Application 622/2010.

Taking the discussion further, the 3rd respondents allege that the applicants herein and all the other plaintiffs in O.S 009/2009 are persons that are liable to pay their fees according to their fee agreement with the 1st respondent. The applicants therefore fall within the categories of persons that are provided for in s.62 (1) of the Advocates Act which provides as follows:-

“Any person affected by an order or decision of a taxing officer made under this Part of this Act or any regulations made under this Part of this Act may appeal within thirty days to a judge of the High Court who on that appeal may make any order that the taxing officer might have made.”
The right to appeal a decision is a subset of the right to be heard and always a creature of statute. In addition, it is one of those rights that are non-derrogable under the Constitution of the Republic of Uganda. Therefore, where the right exists the courts are under an obligation to ensure that a party who has the right to appeal against a decision is given latitude to do so. The applicants’ appeal which is pending hearing is therefore validly before this court and it ought to be heard before the monies held on their account by the 2nd respondent are spent to pay the 3rd respondent.

I was also persuaded by the arguments of Mr. Tumusiime that the fee agreement in contest appears, on the face of it, to be contrary to the provisions of s.55 (1) (b) of the Advocates Act and rule 26 of the Advocates (Professional Conduct) Regulations. There is also the proposition that commended itself to me from the case of Howells & Kelly v. The Dominion Insurance Co. Ltd., [2005] EWHC 522; where the High Court of England and Wales considered the dicta in an earlier case, that save for the legal representative(s) named in a representative suit, the rest of the persons bound by the judgment and orders in the action have no obligation to pay the costs of the representative’s advocates.

However, I will not pre-empt the arguments and decisions that are meant to be made in the appeal filed as Misc. Application No. 645 of 2010 and will only add that I was persuaded by the arguments made by Mr. Tumusiime, which were very helpful in reaching a decision in this matter, and with which all the advocates that appeared with him agreed. By his legal arguments and the evidence adduced in the affidavits in support, the applicants have made out a case that is befitting for me to exercise my discretion to grant them an order staying the execution of the Deputy Registrar’s orders in M/A 622 of 2010.
In conclusion, for the avoidance of doubt, the interim order for stay of execution which I issued on the 17/11/2010 is hereby lifted. The orders of the Deputy Registrar in M/A 622 of 2010 shall be stayed until the hearing and final disposal of the applicant’s appeal in M/A 645 of 2010. Due to the fact that this application and the appeal now pending before this court were filed by the three firms that have appeared here today for the applicants, there shall be a certificate for three advocates. The costs of this application shall be borne by the 3rd respondent firm.

Irene Mulyagonja Kakooza