Wakilii

Henry Wambuga ( Liquidator of African Textile Mills Limited in Liquidation) v Ranchhodbhai Shivabhai Patel and Mukwano Enterprises Limited (Civil Application 42 of 2021)

Supreme Court · a2d3ff82e417ee1c Application for Review Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Application to the Supreme Court to recall and review its own judgment and rulings, brought under the slip rule and the Court's inherent jurisdiction
Decision
Application for review allowed; the impugned judgment and ruling recalled, the findings on 'any other fraudulent conduct' and the liquidator's removal set aside, and the 2nd Respondent held entitled to a refund of the purchase price.

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Holding

On the Chief Justice's lead ruling, the Supreme Court held that its judgment in Civil Appeal No. 6 of 2017 and ruling in Civil Application No. 16 of 2019 should be recalled and reviewed under its inherent jurisdiction (rule 2(2)). The Court had committed fundamental errors by raising new issues of "any other fraudulent conduct" and negligence and deciding them without affording the parties a hearing, re-evaluating facts as a first appellate court, removing the liquidator without a hearing, and relying on a contested valuation certificate. It set aside the findings on the purported new fraud issue and the liquidator's removal, and held the 2nd Respondent entitled to a refund of the purchase price.

Facts

African Textile Mills Ltd (ATM) entered voluntary liquidation, with the Applicant as liquidator. ATM borrowed heavily and defaulted; the suit property at Mbale (LRV 786 Folio 12) was charged. In September 2007 the Applicant, as liquidator, sold the suit property to the 2nd Respondent, Mukwano Enterprises, for US$1,200,000 without a special resolution of members. The 1st Respondent sued alleging fraud, undervalue, a bribe and secrecy. The High Court and Court of Appeal found no fraud and held the sale valid and the 2nd Respondent a bona fide purchaser. On second appeal (Civil Appeal No. 6 of 2017) the Supreme Court raised a new issue of "any other fraudulent conduct," found the liquidator had acted unlawfully amounting to fraud and gross negligence, and nullified the transfer. In subsequent reviews (Civil Application No. 16 of 2019) it ordered return of the plant and machinery, or payment of UGX 11,944,127,000, and removed the Applicant as liquidator. The Applicant then sought review of these decisions.

Issues

  1. Whether there is manifest illegality or fundamental error on the face of the record to warrant the Court's recall and review of its judgment in Civil Appeal No. 6 of 2017 and its ruling in Civil Application No. 16 of 2019.
  2. Whether the alleged errors fell to be corrected under the slip rule (rule 35(1)) or under the Court's inherent jurisdiction (rule 2(2)) of the Supreme Court Rules.
  3. Whether the Court denied the Applicant and the 2nd Respondent a fair hearing by raising and deciding new issues of fraud and negligence of its own motion.
  4. Whether the Court had power to remove the Applicant as liquidator without a hearing and without an application showing cause.
  5. Whether the 2nd Respondent was entitled to a refund of the purchase price following nullification of the sale.
  6. What other remedies are available to the Applicant.

Orders

  • The impugned judgment in Civil Appeal No. 6 of 2017 and the ruling in Civil Application No. 16 of 2019 (No. 2) recalled and reviewed.
  • The decision and findings on the purported new issue of 'any other fraudulent conduct' and the orders arising therefrom set aside.
  • The finding that a liquidator in a voluntary winding up was required to obtain consent before sale, being premised on the new fraud issue, set aside.
  • The order removing the Applicant as liquidator of African Textile Mills Limited (in liquidation) set aside for breach of the right to a fair hearing.
  • The orders made in reliance on the valuation certificate set aside for want of a hearing of the 2nd Respondent.
  • The 2nd Respondent held entitled to a refund of the purchase price of the suit property.

Key headnotes

Civil Procedure — Review — Finality of Judgments — Exceptions under the Supreme Court Rules
A final judgment of the Supreme Court is conclusive and beyond recall by that Court, save under the limited exceptions provided by rules 2(2) and 35(1) of the Judicature (Supreme Court Rules) Directions.
Civil Procedure — Slip Rule (rule 35(1)) — Scope — Clerical or accidental errors only
The slip rule corrects only clerical or arithmetical mistakes and errors arising from an accidental slip or omission; it does not extend to a mistaken appreciation of the evidence or of the law, the remedy for which is an appeal.
Civil Procedure — Review — Inherent Jurisdiction (rule 2(2)) — Power to correct injustice and give effect to the Court's intention
Under rule 2(2) the Court has inherent jurisdiction to recall and amend its judgments to give effect to its true intention and to correct injustice, including setting aside an order made in breach of natural justice; the grounds, read with the ejusdem generis rule, are confined to the class of those enumerated.
Constitutional Law — Right to a Fair Hearing (Article 28) — New issue raised by the court of its own motion
Where an appellate court raises a new issue of its own motion, it must afford the parties an opportunity to be heard before deciding it; a decision made without such a hearing is a fundamental error vitiating the judgment.
Company Law — Liquidator — Removal — Requirement of a hearing and cause shown
A liquidator cannot be removed without a hearing; removal requires an application or motion in which cause is shown and which is served on the liquidator, and the issue of removal must be live in the proceedings.
Statutory Interpretation — 'Error apparent on the face of the record' — Unsuitability as the definitive test for review
The expression 'error apparent on the face of the record', derived from the law of certiorari, is not the definitive test for whether a decision is amenable to review under rule 2(2); errors requiring extrinsic evidence, such as reliance on a repealed law or denial of a fair hearing, may also found review.
Civil Procedure — Review — Refund on a nullified sale — Accidental omission to order restitution
Where a sale is nullified, the purchaser is entitled to a refund of the purchase price as a consequential restitution; a failure to order such refund in the original judgment may be an accidental omission correctable on review.

Legislation cited (18)

  • Judicature (Supreme Court Rules) Directions SI 13-11 rule 2(2)
  • Judicature (Supreme Court Rules) Directions SI 13-11 rule 35(1)
  • Judicature (Supreme Court Rules) Directions SI 13-11 rule 35(2)
  • Judicature (Supreme Court Rules) Directions SI 13-11 rule 42
  • Judicature (Supreme Court Rules) Directions SI 13-11 rule 43
  • Constitution of Uganda 1995 Article 28
  • Constitution of Uganda 1995 Article 126(2)(e)
  • Constitution of Uganda 1995 Article 132(4)
  • Companies Act (Cap 110) s.276(1)
  • Companies Act (Cap 110) s.244
  • Companies Act (Cap 110) s.301
  • Insolvency Act 2011 s.2
  • Insolvency Act 2011 s.118(2)
  • Civil Procedure Act (Cap 71) s.82
  • Civil Procedure Act (Cap 71) s.99
  • Civil Procedure Rules Order 46 rule 1
  • Civil Procedure Rules Order 19 rule 3(1)
  • Civil Procedure Rules Order 17 rule 3

Cases cited (24)

  • Orient Bank Ltd v Fredrick Zaabwe & Mars Trading Ltd (Civil Application No. 17 of 2007)
  • Zaituna Kawuma v George Mwa Lurum (Civil Application No. 3 of 1992)
  • Fang Min v Dr. Kaijuka Mutabaazi Emmanuel (Civil Application No. 6 of 2009)
  • Livingstone Sewanyana v Martin Aliker (Civil Application No. 4 of 1991)
  • Isaya Kalya & 2 Ors v Moses Macekenyu (Civil Application No. 28 of 2015)
  • Elizabeth Nalumansi Wamala v Jolly Kasande & 2 Ors (Civil Application No. 29 of 2017)
  • David Muhenda v Humphrey Mirembe (Civil Application No. 5 of 2012)
  • John Sanyu Katuramu & 47 Others v Attorney General (Constitutional Application No. 1 of 2016)
  • Mabirizi K. Kiwanuka v Attorney General (Miscellaneous Application No. 7 of 2018)
  • Dr. (Rtd) Col Kizza Besigye v Y.K Museveni & Anor (Election Petition No. 1 of 2001)
  • Mohamed Alibhai v W.E Bukenya Mukasa & Anor (Civil Appeal No. 56 of 1996)
  • Milly Masembe v Sugar Corporation & Anor (Civil Appeal No. 1 of 2000)
  • Ham Enterprises Ltd & 2 Ors v DTB (U) Ltd & Anor (Civil Appeal No. 13 of 2021)
  • Re Nakivubo Chemists (U) Ltd (1979) HCB 12
  • Mutual Shipping Corp of New York v Bayshore Shipping Co of Monrovia, The Montan [1985] 1 ALL ER 520
  • Autodesk Inc v. Dyason (No. 2) [1993] HCA 6; (1993) 176 CLR 300
  • Smith v New South Wales Bar Association [1992] HCA 36, 176 CLR 256
  • R v Bow Street Metropolitan Stipendry Magistrate and Ors, exparte Pinochet Ugarte (No.2) [1999] 1 ALL ER 577
  • Cassel & Co Ltd v Broome (No. 2) [1972] 2 ALL ER 849
  • Tibbles v SIG plc (t/a Asphaltic Roofing Supplies) [2012] 4 All ER 259
  • Beresford v Royal Insurance Co. Ltd [1938] ALL ER 586
  • Vallabhdas Karsandas Raniga v Mansukhlal Jivraj and Others [1965] 1 EA 700 (CAN)
  • Nyamogo & Nyamogo v Kago [2001] 1 EA 173
  • Champsey Bhara v Jivraj Balloo Spg. & Wg. Co [1923] AC 480
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