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Shell (U) Ltd & 9 Ors v Muwema & Mugerwa Advocates & Solicitors & anor

Supreme Court · [2014] UGSC 9 · 2014 Appeal Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Third appeal to the Supreme Court from the Court of Appeal, originating in a High Court challenge under the Advocates Act to a taxing officer's charging orders and an advocate's remuneration agreement.
Decision
Appeal substantially allowed; the remuneration agreement held illegal and unenforceable; the Court of Appeal decision set aside; cross-appeal and ground for affirmation dismissed.

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Holding

The Supreme Court held that an advocate's remuneration agreement providing for a percentage of the proceeds, rather than a gross sum or salary, is illegal under section 50(1) of the Advocates Act, and is unenforceable against represented oil companies who never signed it, since a representative order to sue does not authorise binding principals to such an agreement. The agreement was champertous and contrary to public policy, champerty and maintenance having been codified in the Advocates Act. A trial judge has inherent jurisdiction under section 17 to discipline an advocate for misconduct in proceedings, though only for those proceedings. The appeal substantially succeeded; the cross-appeal and the ground for affirmation were dismissed.

Facts

The ten appellant oil importers, with forty other companies, were beneficiaries of a representative suit brought by Rock Petroleum (U) Ltd against the Uganda Revenue Authority to recover excise duty wrongly collected. Judgment ordered URA to refund the importers. On the day the suit was filed, the 1st respondent law firm entered into a remuneration agreement with Rock Petroleum entitling the advocates to costs plus 16% of the total proceeds (and a further 4% if recovery was protracted by appeal). The appellants neither signed nor saw the agreement. The Deputy Registrar, as taxing officer, issued charging orders directing payment of 16% of the refunds to the firm. The appellants challenged the agreement's legality and enforceability. The High Court found the agreement illegal and set aside the charging orders; the Court of Appeal reversed, treating the High Court judgment as a nullity for disobeying an interim stay, and remitted the matter for fresh hearing. The appellants appealed to the Supreme Court.

Issues

  1. Whether the remuneration agreement between the 1st respondent and Rock Petroleum (U) Ltd was illegal.
  2. Whether the remuneration agreement was enforceable against the appellants, who were not parties to it.
  3. Whether the Court of Appeal condoned an illegality by failing to determine the legality of the remuneration agreement argued before it.
  4. Whether the interim order of stay issued by the Assistant Registrar of the Court of Appeal had been withdrawn and whether disobeying it rendered the High Court proceedings a nullity.
  5. Whether a trial judge has jurisdiction to discipline an advocate for misconduct committed during proceedings, and the limits of that power.
  6. Whether the trial judge exhibited bias against the 1st respondent firm.
  7. Whether the Supreme Court should determine the issue itself or remit the matter to the High Court for retrial.
  8. Whether Miscellaneous Application No. 645 of 2010 was statute barred under sections 5 and 6 of the Civil Procedure Act.
  9. Whether the appellants could take the benefit of the proceeds notwithstanding the illegal remuneration agreement (cross-appeal).

Orders

  • The cross appeal is dismissed with no order as to costs.
  • The grounds for affirming the decision of the Court of Appeal are dismissed.
  • The appeal is allowed with costs for two counsel to the appellants against the 1st respondent, in this court and in the courts below.

Key headnotes

Advocates' Remuneration — Contentious Business — Form of Agreement
A remuneration agreement for contentious business that provides for payment by a percentage of the proceeds of the claim, rather than by a gross sum or salary, is illegal under section 50(1) of the Advocates Act.
Advocates' Remuneration — Enforceability against Non-signatory Clients
A remuneration agreement is unenforceable against represented parties who did not sign it, and a representative order authorising a party to sue on behalf of others does not, without more, authorise that party to bind the principals to a remuneration agreement under section 51(1)(b) of the Advocates Act.
Champerty and Maintenance — Continuing Application in Uganda
An advocate's agreement to share in the proceeds of a claim contingent on success is champertous and contrary to public policy; the doctrines of champerty and maintenance remain part of Ugandan law, having been codified in the Advocates Act and its Regulations.
Illegality — Duty of the Court Once Raised
A court will not enforce an illegal contract once the illegality is brought to its notice where the party seeking the court's aid is a party to the illegality, and an appellate court is bound to determine an issue of illegality properly argued before it rather than leaving it undecided.
Advocates Act s.51(1)(c) — Purposive Construction of the Notary Certificate Requirement
The notary's certificate requirement in section 51(1)(c) of the Advocates Act must be interpreted purposively to protect clients; each person to be bound must personally appear before and satisfy the notary public that they understand the nature of the agreement.
Disciplinary Jurisdiction over Advocates — Scope and Limits
A trial judge has inherent jurisdiction under section 17 of the Advocates Act to discipline an advocate for misconduct committed during proceedings before the court, but a suspension must be limited to the particular proceedings and may not extend to barring the advocate from the entire court.
Appellate Powers — Determining a Matter Instead of Ordering Retrial
Under section 7 of the Judicature Act and its inherent powers, the Supreme Court may make the orders that the court of first instance should have made where all relevant material is on record, instead of remitting the matter to the High Court for retrial.

Legislation cited (32)

  • Advocates Act s.17
  • Advocates Act s.20
  • Advocates Act s.25
  • Advocates Act s.48
  • Advocates Act s.50(1)
  • Advocates Act s.51(1)(b)
  • Advocates Act s.51(1)(c)
  • Advocates Act s.51(2)
  • Advocates Act s.54
  • Advocates Act s.55(1)(b)
  • Advocates Act s.61
  • Advocates Act s.62
  • Advocates Act s.69
  • Advocates Act s.74(1)(i)
  • Advocates Act s.74(1)(j)
  • Advocates (Professional Conduct) Regulations reg.26
  • Contract Act 2010 s.19(2)
  • Civil Procedure Act s.5
  • Civil Procedure Act s.6
  • Civil Procedure Act s.27
  • Civil Procedure Act s.98
  • Judicature Act s.7
  • Judicature Act s.41(1)(v)
  • Constitution of Uganda Article 139(1)
  • Constitution of Uganda Article 126(2)(e)
  • Civil Procedure Rules Order 11 rule 1
  • Court of Appeal Rules rule 52
  • Court of Appeal Rules rule 94
  • Court of Appeal (Judicial Powers of Registrars) Practice Direction No.1 of 2004
  • Judicature (Supreme Court Rules) Directions S.I 13-11 rule 2(2)
  • Exchange Control Act s.1
  • Taxes and Duties (Provisional Collection) Act

Cases cited (19)

  • Re Trepca Mines Ltd [1962] 3 All ER 351
  • Mkono & Co Advocates v JW Ladwa Ltd [2002] EA 145
  • Active Automobile Spares Ltd v Crane Bank Ltd & Rajesh Pakesh (Civil Appeal No. 21 of 2001)
  • Makula International Ltd v His Eminence Cardinal Nsubuga and Another [1982] HCB 13
  • Price Water House Coopers Inc & 4 Ors v National Potato Cooperative Ltd, case No.448/02; The Supreme Court of Appeal of South Africa
  • Kituuma Magala & Co Advocates v Celtel (U) Ltd [2001-2005] HCB Vol 3, 72
  • SV Pandit v William Mukasa Ssekatawa and Others [1964] EA 490
  • Mutoigo v Shell (U) Ltd (Miscellaneous Application No. 68 of 2007)
  • Meera Investments Ltd v Commissioner General of Uganda Revenue Authority (Civil Appeal No. 15 of 2007)
  • Attorney General v Anyang' Nyong'o & Others [2007] 1 EA 12
  • The President of the Republic & 2 Others vs. South African Rugby Football Union & 3 Others, (Case CCT 16/98)
  • Uganda Polybags Ltd v Development Finance Bank (Miscellaneous Application No. 2 of 2000)
  • GM Combined (U) Ltd v AK Detergents (U) Ltd (Civil Appeal No. 19 of 1998)
  • Ex parte Barnsley and District Licensed Victuallers' Association [1960] 2 QB 169
  • Tinyefuza v Attorney General (Constitutional Petition No. 1 of 1997)
  • Bakaluba Peter Mukasa v Namboze Betty Bakireke (Election Appeal No. 4 of 2009)
  • Marles v Philip Trant & Sons Ltd [1954] 1 QB 29
  • Moon v Atherton [1972] 2 QB 435
  • Markt & Co Ltd v Knight Steamship Co Ltd [1910] 2 KB 1021
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.