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Mujibhai Madhvani & Co. Ltd. & Anor. v. Francis Mugarura & 35 Ors. [2010] UGSC 21

Supreme Court · 2010 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second civil appeal from the Court of Appeal affirming a High Court award of terminal benefits
Decision
Appeal dismissed; the High Court award of terminal benefits with interest, as affirmed by the Court of Appeal, was upheld.

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Holding

The Supreme Court dismissed a second appeal arising from an award of terminal benefits to retrenched employees of an expropriated company. It held that section 2(2)(a) of the Expropriated Properties Act nullifies only dealings in the expropriated property or business itself, not employees' employment contracts; applying the ejusdem generis rule, "liabilities of whatever description" in section 1(g) means liabilities in the nature of property such as mortgages, liens and debentures, not employment contracts. Having repossessed the company and made representations and part-payments, the appellants were estopped under section 114 of the Evidence Act from disclaiming liability. The 1991 terms and conditions of service were binding and not unconscionable. The appeal was dismissed with costs.

Facts

The two appellant companies, founded and funded by the Madhvani family, included the Steel Corporation of East Africa (EASCO), which was expropriated in 1972 during the Idi Amin regime. While the company was vested in the Government and managed by the Ministry of Finance under the Expropriated Properties Act, employees were retained and recruited, and in 1991 the Board of Directors adopted improved terms and conditions of service, with a new salary structure effective 1 August 1991. In 1994 the first appellant, the majority shareholder and former owner, repossessed the second appellant. The appellants then retrenched the employees and paid terminal benefits, but not in accordance with the 1991 terms. The respondents, senior staff, sued for the balance of Shs.482,463,910. Documentary evidence (exhibits P1, P5-P10) showed the appellants acknowledged the benefits owed and represented they would pay. The High Court awarded the balance with interest, and the Court of Appeal affirmed.

Issues

  1. Whether section 2(2)(a) of the Expropriated Properties Act nullified only dealings in property and business and not employees' employment contracts.
  2. Whether employment contracts entered into after 1972 amounted to dealings in the property or business of the second appellant and were nullified under section 2(2)(a).
  3. Whether the first appellant, having repossessed the second appellant and paid some terminal benefits, was estopped from disclaiming liability for the respondents' terminal benefits under the 1991 terms and conditions of service.
  4. Whether the 1991 terms and conditions of service applied in ascertaining the respondents' terminal benefits and whether those terms were unfair and unconscionable.

Orders

  • Appeal dismissed.
  • Costs of the appeal awarded to the respondents in the Supreme Court and in the two courts below.

Key headnotes

Expropriated Properties Act — Scope of dealings nullified under s.2(2)(a)
Section 2(2)(a) of the Expropriated Properties Act nullifies only purchases, transfers, grants and dealings in the expropriated property or business itself, and does not nullify employees' contracts of employment.
Ejusdem generis — Meaning of "liabilities of whatever description"
Under the ejusdem generis rule, the general words "liabilities of whatever description" in the definition of "property or business" are confined to liabilities in the nature of property, such as mortgages, liens and debentures, and do not extend to employment contracts.
Expropriated Properties Act — Acts of lawful management during Government control
Contracts of employment and other undertakings effected while an expropriated business was under the lawful management of the Ministry of Finance form part of that lawful management and cannot be nullified by the Expropriated Properties Act.
Estoppel — Section 114 of the Evidence Act
Where a party, by declaration, act or omission and conduct such as part-payment and acknowledgment of liability, intentionally causes another to believe a thing to be true and to act on that belief, that party is estopped under section 114 of the Evidence Act from denying the truth of that thing.
Unconscionability — Requirements for setting aside a bargain
A bargain is not unfair or unconscionable unless a party imposed objectionable terms in a morally reprehensible manner affecting conscience; terms resolved openly by a company's board with the benefit of legal advice are not unconscionable.
Implied terms — Business efficacy
Terms will be implied into a contract only where necessary to give it business efficacy; where terms are clear and expressly written into the contract there is nothing to be implied.
Pleadings — Issues not raised at trial
A party is bound by its pleadings and cannot raise on appeal an issue, such as the unconscionability of contract terms, that was neither pleaded nor raised at trial.

Legislation cited (8)

  • Expropriated Properties Act 1982 s.2(2)(a)
  • Expropriated Properties Act 1982 s.2(1)
  • Expropriated Properties Act 1982 s.1(g)
  • Evidence Act s.114
  • Registration of Titles Act
  • Companies Act
  • Assets of the Departed Asians Decree 1973
  • Properties and Businesses (Acquisition) Decree 1973

Cases cited (5)

  • Registered Trustees of Kampala Institute v Departed Asians Property Custodian Board (Civil Appeal No. 21 of 1993)
  • Greasley v Cooke [1980] 3 All ER 710
  • Multiservice Bookbinding Ltd and others v Marden [1978] 2 All ER 489
  • Trollope and Colls Ltd v Atomic Power Construction Ltd [1962] 3 All ER 1035
  • Interfreit Forwarders (U) Ltd v EADB (Civil Appeal No. 33 of 1992)
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.