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Apolo Hotel Corporation Ltd v Geoffrey Oryema and Others [2007] UGSC 6

Supreme Court · 2007 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second appeal to the Supreme Court from a Court of Appeal decision reversing a High Court order that struck out the appellant as defendant on a preliminary point of law
Decision
Appeal dismissed; matter remitted to the High Court for a full trial on the proper-defendant question.

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AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions — always read the source judgment before relying on it.

Holding

The Supreme Court dismissed the appeal, holding that the appellant, as successor to Apolo Hotel Corporation, was the proper defendant in the respondents' wrongful-dismissal suit. Although the Government of Uganda was the majority shareholder in the Corporation, ownership of the Apolo (Sheraton) Hotel was vested in the Corporation by the Apolo Hotel Corporation Act, not in its shareholder. On divestiture under the Public Enterprises Reform and Divestiture Act, the Government divested only its shares, and the appellant took over the Corporation's assets and liabilities. Noting serious gaps in the evidence on ownership, the Court remitted the matter to the High Court for a full trial.

Facts

The respondents were employed in various capacities at Kampala Sheraton Hotel between 1990 and 1997, when they were dismissed on grounds they considered unlawful. In 2002 they sued the appellant in the High Court (Civil Suit No. 165 of 2002) for terminal benefits, general damages for wrongful dismissal, interest and costs. Before hearing, the appellant raised a preliminary point that it was the wrong party, contending it had never employed the respondents and owned only the land, while the Government owned the hotel business through Sheraton Overseas Management Corporation as its agent. The trial judge accepted this and struck out the appellant. The Court of Appeal reversed, holding the appellant owned the hotel as successor to Apolo Hotel Corporation. The Apolo Hotel Corporation Act 1967 vested ownership and administration of the hotel, and the land, in the Corporation; on divestiture under the Public Enterprises Reform and Divestiture Act 1993, the Government divested its shares and the appellant assumed the Corporation's assets and liabilities under its Memorandum of Association.

Issues

  1. Whether the Apolo (Sheraton) Hotel was owned by the Government of Uganda or by Apolo Hotel Corporation and its successor, the appellant.
  2. Whether the appellant, as successor to Apolo Hotel Corporation, was the proper defendant in the respondents' suit.
  3. Whether the appellant was the employer of the respondents.

Orders

  • Appeal dismissed.
  • Case remitted to the High Court for proper trial.
  • Costs of this appeal to abide the trial in the High Court.
  • Costs in the Court of Appeal to be borne by the appellant as ordered by that Court.

Key headnotes

Company Law — Corporate Personality — Distinction Between Company Property and Shareholder
Property owned by a corporation belongs to the corporation and not to its shareholders; the fact that the Government holds the majority, or even the entire, shareholding in a corporation does not make the Government the owner of the corporation's property.
Company Law — Successor Liability — Privatisation and Divestiture
On divestiture under the Public Enterprises Reform and Divestiture Act, the Government divests only its shares in the public corporation; a successor company that, under its Memorandum of Association, takes over the rights, assets, property, obligations and liabilities of the divested corporation assumes those liabilities and is the proper party to be sued in respect of them.
Statutory Interpretation — Ownership Conferred by Statute — Continuance Until Lawfully Altered
Where a statute vests ownership and control of property in a corporation, that statutory ownership continues unless and until evidence shows it was lawfully altered or the relevant provisions were amended; ownership is determined by reference to the instrument conferring it.
Civil Procedure — Striking Out a Defendant — Determination of Proper Party Without Full Trial
A court should not strike out a defendant on a preliminary point of law where there are serious gaps in the evidence on a contested factual question such as ownership; the proper course is to hold a scheduling conference, identify points of agreement and disagreement, frame issues and conduct a full hearing.

Legislation cited (7)

  • Apolo Hotel Corporation Act 1967 s.3
  • Apolo Hotel Corporation Act 1967 s.14
  • Apolo Hotel Corporation Act 1967 s.29
  • Apolo Hotel Corporation Act 1967 s.30
  • Public Enterprises Reform and Divestiture Act 1993
  • Public Lands Act s.19
  • Companies Act
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.