Court name
Commercial Court of Uganda
Judgment date
22 December 2014

Sekabira v Bitwire (Miscellaneous Application-2014/506) [2014] UGCommC 178 (22 December 2014);

Cite this case
[2014] UGCommC 178

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISC. APPLICATION NO. 506 OF 2014

BEN SEKABIRA:::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT

VERSUS

ROBERT BITWIRE::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT

 

 

BEFORE THE HON. MR. JUSTICE HENRY PETER ADONYO

RULING

  1. Background:

The Applicant by a notice of motion under order 46Rules 1(b) and 8 of the civil procedure rules and Section 98 of the civil procedure Act made this application to this Honourable Court for orders that the this court review by setting aside its ruling making the applicant liable for payment of Cooperative Bank’s debt in MA of 559 of 2013, Robert Bitwire v Cooperative Bank and Another and that the costs of this application be provided for.

The Application is made on the grounds which are further detailed I n the application as follows;

  1. The respondent filed Civil Suit No. 56 of 2004 against the Cooperative bank Limited (In Liquidation) in which a consent was recorded by the parties thereto pursuant to which the bank would pay monies to him (Respondent),
  2. The respondent subsequently filed Miscellaneous Application No.559 of 2013 in which the court delivered its ruling on the 3rd of December, 2013 holding the applicant liable to pay the debt of Cooperative bank Limited, on the basis that as liquidator he is responsible for the affairs of the Cooperative Bank Limited,
  3. The finding that the Applicant is liable for payment of the amounts due under the consent is an error on the face of the record as it is trite under company law, that neither a shareholder nor a director and or officer of a limited liability company can be liable for the debts of a company and further under the law of agency, an agent cannot be liable for the debts of a disclosed principal,
  4. The Applicant is aggrieved by the ruling of the court which in effect changes the legal regime of the law of agency and company law,
  5. It is just and equitable and in the interests of justice that the court reviews its ruling.

The grounds of this application are supported by an affidavit sworn by the said Ben Sekabira dated 18th June, 2014 containing several annextures and these are on record.

  1. Applicant’s case:

The case of the Applicant is that he is an employee of Bank of Uganda, which Bank of Uganda pursuant to Section 32 of the Financial Institutions Statute 1993 (now Cap 54 of the Laws of Uganda) took over the management and control of the Cooperative Bank Ltd and thereafter placed it under liquidation. That by the said law, Bank of Uganda is the statutory liquidator of the Cooperative Bank Ltd and the applicant being merely an employee of Bank of Uganda was engaged in the liquidation process of the Cooperative Bank Ltd, not as liquidator, but as Bank of Uganda’s employee engaged in the liquidation process.

That the respondent filed Civil Suit No. 56 of 2004 Robert Bitwire v Cooperative Bank Ltd (in Liquidation), seeking for various orders against the Cooperative Bank Ltd (in Liquidation). The said suit arose out of a banker/customer relationship between the plaintiff’s late father, one David Bitwire and the Cooperative Bank Ltd. That in the said suit, the applicant was never a party to the suit.

That a consent judgment was recorded therein pursuant to which the Bank would pay the Respondent a sum of Ug Shs 27.745, 000/= (Uganda Shillings Twenty Seven Million only), interest and costs. The said monies have to date not been paid by the Cooperative Bank Ltd (In Liquidation) as its liquidation is still ongoing.

The respondent then filed Misc. Application No. 559 of 2013 Robert Bitwire v Coop Bank Ltd (In Liquidation) & Ben Sekabira seeking for several orders which included the following;

  1. The Cooperative Bank in liquidation and the liquidator Benedicto Sekabira be summoned to court to answer charges of contempt of court for defying the orders of Hon. Lady Justice Arach Amoko in Misc. Application No. 304 of 2009 arising from Civil Appeal No. 4 of 2009 and the consent decree dated the 3rd September 2007;
  2. An order of a permanent injunction doth issue to restrain the liquidator from stopping all payments of all monies owed to the applicant;
  3. An order that the delay to effect payment of UG shs. 101,023,500/= (Uganda shillings One Hundred One Million Twenty Three Thousand Three Hundred only) to the applicant is an abuse of Court process and an infringement of the applicant’s constitutional right to property in the above mentioned judgment and rulings;
  4. An order that matters relating to the consent judgment in issue res judicata and all subordinate Courts are functus officio to revisit it as a decision had already been taken in the Constitution Petition No. 3  of 2008 arising from HCCS No. 719 of 1997
  5. A declaration be made that the applicants fundamental rights and freedoms were contravened and grossly violated by the respondents;

The court held its ruling making the following orders;

  1. Order the Respondents and or its agents or successors in title to appear in court to answer charges of contempt of court for defying the orders of Hon. Lady Justice Arach Amoko in Misc. Application No. 304 of 2009 arising from Civil Appeal No. 4 of 2009 and the consent decree dated the 3rd September 2007;

 

  1. Order that the applicant be forthwith paid the pending decretal sum plus 15% interest from the time of judgment by the respondents plus the taxed costs;
  2. Order of a permanent injunction to restrain the liquidator from stopping all or any payments of monies to the applicant arising for 1 above;
  3. Declare that the applicant’s fundamental right to property had been contravened and grossly violated by the respondents for having failed to comply with the court orders as in 1 above

 

  1. Declare that the applicant is entitled to compensation for the violation and contravention of his fundamental rights to property for the period in question and order compensation equivalent of 2% of the decretal sum;
  2. An order that the applicant be paid costs occasioned by this application”

The applicant argues that this application falls within the scope of Order 46 rule 1 based on the following;

  1. The applicant is an aggrieved person as he is affected in his personal capacity by the decision of the Court finding him liable for payment of the debts of the Cooperative bank Limited (In Liquidation);
  2. The finding that the applicant as agent of the Statutory Liquidator, he is liable for the debts of Cooperative Bank Ltd (In Liquidation) is an error on the face of record. As earlier submitted this is an error of law.

Therefore, the applicant is aggrieved by the orders of this court which he argues makes him an agent of the Cooperative Bank (In Liquidation) and which required him to personally pay the Cooperative Bank’s debt and sought for a review on the basis that it was an error of law on the face of the record.

  1. The Respondent’s case:

The Respondent opposes this application and submits that the firstly the law relating to grant of  review is where a person who is aggrieved by a judgment or order of a court which he has not appealed against is that such a person can apply to have such order or judgment reviewed by the Court that passed it on proof or discovery of new and material evidence which had not been available earlier to court after due diligence of the party before the judgment or Order was made and such a person ought to be legally aggrieved as was held in the case of John Nagenda & 53 others v Coffee Marketing Board HCC 80 of 1996 where Byamugisha J held that;

“A party applying for review must feel aggrieved that the decision pronounced against him by court has wrongfully deprived him something or wrongfully affected his title to something”.

Secondly, the respondent added that Order 46 rule 1 of the Civil Procedure Rules gives the ground rule upon which a review may be sought by an aggrieved person and they are;

  1. Discovery of new and important evidence which was not within his knowledge and could, therefore, not be produced by him, or
  2. Some mistake or error apparent on the face of the record, or
  3. Any other sufficient reasons.

From the provisions of this rule, it is clear that a party who is aggrieved may apply for review of judgment only where decree or order was made against him. Good examples of such situations are found in the case of Mohamed Allibhai v W. E Bukenya Mukasa & Departed Asians Property Custodian Board Supreme Court Civil Appeal NO.56 of 1995 and Mbogoh v Muthoni & Another [2006] 1 E.A.172 where the general observation was that the applicant must satisfy court that the decision is clearly wrong due to misdirection or because the court acted on the matters on which it should not have acted or it has failed to take into consideration matters which it should have taken into consideration and in doing so arrived at a wrong conclusion.

The instant application indicates that the respondent filed Miscellaneous Application No. 559 of 2013 for Orders that;

  1. The Cooperative Bank in Liquidation and the liquidator Benedicto Sekabira be summoned to Court to answer contempt of Court for defying Orders of Hon. Justice Arach in Civil Appeal No. 04 of 2009 and the consent judgment dated the 3rd day of September 2007,
  2. An order for permanent injunction doth issue to restrain the liquidator from stopping all payments of all the monies owed to the applicant.
  3. An order that the delay to effect payment of Ugx. 101,023,500/= (One Hundred and One Million Twenty Three Thousand Five Hundred shillings only) to the applicant is an abuse of Court process and an infringement of the applicant’s constitutional right to property in the above mentioned judgment.
  4. An order that the matters relating the matters relating to the consent judgment in issue are res judicata and all subordinate courts are functus officio to revisit it as a decision had already been taken in the constitutional court petition NO.o3 of 2008 arising from HCCS No. 719 of 1997.
  5. A declaration be made that the applicants fundamental rights and freedoms were contravened and grossly violated by the respondents.
  6. A declaration that the applicant is entitled to compensation for the violation and contravention of his fundamental rights and freedoms under the fore mentioned provisions and that they are entitled to own property and carry on a lawful occupation, trade and or business.
  7. An order that the applicant be forthwith paid Ugx. 101,023,500/= (One Hundred and One Million Twenty Three Thousand Five Hundred Shillings only) the decretal sum plus interest from the time of judgment by the respondent short of which the liquidator Mr. Sekabira be committed to Civil Prison.
  8. An order that the applicant be paid exemplary/aggravated damages for contempt of court
  9. An order that the applicant be paid costs occasioned to this application.

Subsequently, the court on the 2nd December, 2013 made the following orders;

  1. The respondents and or its agents or successors in title to appear in court to answer charges of contempt of court for defying the orders of Hon. Lady Justice Arach Amoko in Misc. Application No. 304 of 2009 arising Civil Appeal No. 4 of 2009 and the consent decree dated the 3rd of September 2007.
  2. An order that the applicant be forthwith paid the pending decretal sum plus 15% interest from the time of judgment by the respondents plus taxed costs.
  3. An order of a permanent injunction to restrain the liquidator from stopping all or any payments of monies to the applicant arising from 1 above.
  4. A declaration that the applicant’s fundamental rights to property had been contravened and grossly violated by the respondents for having failed to comply with the Court orders as in 1 above.
  5. A declaration that the applicant is entitled to compensation for the violation and contravention of his fundamental rights to property for the period in question, and order compensation equivalent of 2% of decretal sum.
  6. An order that the applicant be paid costs occasioned by this application.

Arising from that ruling, execution process commenced which eventually led to the filing of the instant application by Ben Sekabira in his personal capacity which the respondent opposes.

  1.  Issues:

In arguing this application, the applicant framed the following issues for the settlement of his grievances;

  1. Whether an error of law can be a subject of a review application;
  2. Whether a none party to a contract/suit can be liable to pay the debts arising out of the contract/judgment debt
  3. Whether the applicant is an agent of the Cooperative Bank and in any event whether he is protected in the performance of his duties

 

  1.  Whether an error of law can be a subject of a review application:

The applicant submitted that there was an error on the face of record in that the court made orders making him an agent of the Cooperative Bank Ltd (In Liquidation) with orders that required him to pay the judgment debt arising out of a suit to which he was not party as the said suit arose out of a bank customer relationship to which he was not a party.  He relied on the decision in the case of Kanyabwera v Tumwebaze [2005] 2 EA at page 86 where the Supreme Court of Uganda while quoting AIR commentaries: The Code of Civil Procedure by Manoher and Chitaley, Volume 5, 1998 stated that,

“…an error may be a ground for review; it must be one apparent on the face of the record, i.e. an evident error which does not require any extraneous matter to show its incorrectness. It must be an error so manifest and clear, that no court would permit such an error to remain on the record. The “error” may be one fact, but it is not limited to matters of fact and includes error of law”

The applicant contends therefore that since he was not a party nor agent of the Cooperative Bank (In Liquidation) and where the bank was sued by its customer, then that  clearly was an error on the face of the record which this Honourable Court should vacate on the basis of the Kanyabwera case (cited above) .

The respondent on the other hand had submitted otherwise. He stated that this court should find that the instant applicant was an agent of the bank liquidation since he was acting on behalf of the official liquidator, that is Bank of Uganda and hence cannot deny the liabilities in his personal capacity as he is not the aggrieved party with no interests of the applicant affected by the orders of court. In his submission, the respondent argued that Order 46 rule 1 of the Civil Procedure Rules and the cases of Mohammed Allibhai v W.E Bukenya Mukasa & Departed Asian Property Custodian Board SCCA No. 56 of 1995 and Mboga v Muthoni & Another [2006] 1 EA 172 do not apply in the instant case of the applicant since he was not personally a party in the suit. That what is of note is that amount money totaling to Ug. Shs.  101,023,500/= (One Hundred One Million Twenty Three Thousand Five Hundred Shillings only) as the decretal sum plus interest which was to be paid to the respondent was to be paid by the applicant for and on behalf of the official liquidator for the Cooperative Bank (U) Ltd (In Liquidation) with no reason being advanced as to why the applicant was holding onto those payments yet he ought to have done so with his duty only being to comply with the court orders and pay the monies due and payable which are not from his personal account but on the account of the bank in liquidation.

I agree with this submission entirely. It is evident to me that the applicant is an agent of the liquidator which is in control of the 1st respondent since the 1st respondent was put into liquidation. This relationship makes it incumbent on the applicant as agent of the principal to comply with court orders. The applicant is therefore well aware of the position of the Cooperative Bank (U) Ltd (In Liquidation) and since he is handling matters concerning the said bank on behalf of the official liquidator, he is clearly liable in that it is his duty to ensure that the court orders are implemented. In this regards, I find that there is no error of law that occurred to warrant a review since there is a clear court order directing the liquidator to pay to the respondent a sum of money amounting to Ugx. 101,023,500/= (One Hundred One Million Twenty Three Thousand Five Hundred Shillings only) as the decretal sum plus interest and costs and this said money is from the account of the bank which is in liquidation and not from the applicant’s personal account.

It is clear to me from the applicant’s affidavit in reply in Misc. Application No. 559 of 2013 that he was a liquidator’s agent, for the Cooperative Bank (U) Ltd (In Liquidation) and hence assumed managerial roles in that capacity. Further,  the applicant even admits to have deducted and paid Ug. Shs. 55,444,860 (Fifty Five Million Four Hundred and Forty Thousand Eight Hundred and Sixty Shillings only) to offset the indebtedness of the respondent, this action in itself shows that the applicant assumed the duties and obligations as a liquidator and he cannot be seen to perform some of the duties and ignore the rest. By his very conduct he estopped to state the contrary.

In making this finding, while I agree that with the fact that an agent only carries out the functions of his principle who should be held liable for any acts or omission, it is evident that where an agent is empowered y its principal to carry out certain functions then an agent is obliged to act accordingly unless evidence is shown to the contrary. In the instant matter, the finding of the court was against the actions of the principal through its agent who failed to implement the court order and this was not an error of law since it was the duty of the agent to implement the court order. He cannot hide on the back of the principal yet he is the face of the principal.

In the instant case, it is not disputed that Mr. Sekabira is an employee of Bank of Uganda the Statutory Liquidator of Cooperative Bank Ltd. It is also not disputed that his involvement in the affairs of Cooperative Bank Ltd was by virtue of his employment liability imposed on him are to ensure that the debts of Cooperative Bank Ltd (In Liquidation) and when he fails to do so then he becomes personally liable for disobeying court orders.

I therefore find no error on the face of the record since the applicant was clearly the agent of the liquidator and he was ordered to carry out and comply with court orders which he, as the agent of the principal failed to personally comply with. 

  1.  Whether a none party to a contract/suit can be liable for payment of a debt and or judgment debt:

In its ruling, the Court ordered that;

“I order that the Applicant be paid the decretal sums plus 15% interest from the time of judgment by the Respondents plus the taxed costs”

The effect of this Order was that the Cooperative Bank Ltd (In Liquidation) through its liquidator was to pay the debt in question. I have looked at the financial institutions Statute, 1993 while the said Act appears to be silent on issues of employment rights from the employer to the Central Bank that may take possession of a financial institution, the said Act must be read in consonance with and not in isolation of employment statutes. The Applicant’s appears to only narrow his role of managing finances only without the obligation of ensuring that all liabilities of the bank that the central bank has taken over are concluded. However, my reading even of Section 32 of the Financial Institutions Act seems to me to vest upon the Central Bank powers of management and control of the affairs of the financial Institution it has taken over which in my opinion includes matters concerning employment with subsection 2 of the said section clearly providing that the central bank may take over operation of a financial institution and conduct matters of that financial institution in its name to which the financial institution may be a party making it clearly liable for the acts or omissions of the financial institution it has taken over. The court’s decision in Greenland Bank Ltd V Westmont Lan (Asia) Ltd HCCS NO. 309 of 1999 (unreported) is therefore applicable, the plaintiff’s argument is unsustainable.

A liquidator is therefore liable to meet the debts of the company in liquidation from the assets of the liquidated company and for the case of the central bank , it is required as the controller of and licensor of banks in the country to ensure that the banks have minimal deposits to protect not only depositors but even their employees and once such banks do not do so then, as the regulator, it assumes all liabilities.

There was therefore no error by the court in its holding that the applicant liable for payment of the debt of the Cooperative Bank Ltd (in Liquidation).

From the above it is very clear that the liquidator assumed the role of management and control of Cooperative Bank (U) Ltd (In Liquidation) and that role include payment of Ug. Shs. 101,023,500/= (One Hundred One million Twenty Three Thousand Five Hundred shillings only) as the decretal sum plus interest to be paid to the respondent as the applicant is running the affairs of Cooperative Bank (U) Ltd (In Liquidation) for and on behalf of the statutory liquidator. The applicant’s role  is not to pay the debts of Cooperative bank (U) Ltd (in Liquidation) but to enforce orders that the respondent obtained from this Honorable Court which the applicant has failed to enforce as an agent of the liquidator for and on behalf of Cooperative bank (U) Ltd (in Liquidation). The issue was in the ruling of this court in Misc. Application No. 559 of 2013

Having found so above ,the other issues collapse as it is evident from the court record that specific orders were made by court which ought to be complied with which the  applicant has not honored . It should be recalled that Court Order are not made in vain and must be complied with I find that this application for  for review is only calculated to continue frustrate the very clear orders of this court which I find not to be in the interests of justice.

  1. Orders:

I find no merits in this application as I find the same to be an abuse of court process. I accordingly dismiss it with costs.

 

 

 

Henry Peter Adonyo

Judge

22nd December, 2014