E.B Nyakana & Sons Limited v Kobusinge & 16 Others (Civil Appeal 2 of 2017)

Supreme Court · [2018] UGSC 58 · 2018 Appeal Dismissed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

Second civil appeal from a Court of Appeal decision upholding a High Court order winding up the appellant company

Decision

Appeal dismissed; Court of Appeal decision and orders upholding the winding up of the appellant company affirmed

The full judgment

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Holding

On a second appeal from concurrent findings, the Supreme Court held that 'open court' denotes a public court session, not a procedure requiring oral evidence, so a winding-up petition could properly be determined on affidavit evidence under Order 19 rule 1, especially where the appellant itself adopted that procedure. There was sufficient evidence of mismanagement to justify winding up under section 222(f) of the Companies Act, and the Court of Appeal had properly re-evaluated the evidence. The will and articles of association, exhibited by the appellant, were part of the record; the bequests vesting property in the company offended section 101 of the Succession Act. The appeal was dismissed with costs.

Facts

The late Eriza Binondo Nyakaana was a promoter of the appellant company together with his three sons, two of whom predeceased him, leaving Samwiri Kiiza as the surviving promoter/director. By his will, the deceased conferred company membership and shares on his surviving children and bequeathed prime properties to the company, directing that the income fund the education of his children and grandchildren. Several beneficiaries petitioned the High Court in 2005 to wind up the company, alleging mismanagement and misappropriation of company funds and the deceased's estate. The matter proceeded substantially on affidavit evidence, with supplementary affidavits, replies and rejoinders, alongside oral evidence of four witnesses, the official receiver's reports, audited accounts and bank statements. On 4 July 2013 the High Court made a final winding-up order and appointed a receiver. The Court of Appeal upheld that order, additionally finding clauses of the will, including the bequest of shares contravening the company's articles, invalid. The company brought a second appeal to the Supreme Court.

Issues

Whether reliance on affidavit evidence in a winding-up petition denied the appellant a hearing in open court and an opportunity to be heard.
Whether there was sufficient evidence on record to support the order winding up the appellant company under section 222(f) of the Companies Act.
Whether the Court of Appeal, as a first appellate court, properly re-evaluated the evidence on record.
Whether the Court of Appeal erred in determining matters relating to the deceased's will and succession outside the scope of the winding-up petition.
Whether the testamentary bequests vesting the deceased's property in the appellant company offended the rule against perpetuity under section 101 of the Succession Act.

Orders

Appeal dismissed with costs.
The decision and orders of the Court of Appeal upheld.

Key headnotes

Company Law — Winding Up — Meaning of 'open court' and use of affidavit evidence

'Open court' denotes a court session presided over by a judge and open to the public; it does not connote a procedure conducted by oral evidence, and a winding-up petition may properly be determined on affidavit evidence.

Civil Procedure — Evidence — Power to order proof by affidavit (Order 19 r.1)

A court may, for sufficient reason, order that any particular fact be proved by affidavit, and the contents of an affidavit constitute evidence; a trial judge cannot be faulted for relying on affidavit evidence the parties themselves adduced.

Civil Procedure — Second Appeal — Limits on disturbing findings of fact

On a second appeal, the court is precluded from questioning the trial court's findings of fact where there was evidence to support them, and may interfere only where there was no evidence to support the finding, that being a question of law.

Civil Procedure — First Appellate Court — Re-evaluation of evidence

There is no set format to which re-evaluation of evidence by a first appellate court must conform; the extent and manner of re-evaluation depend on the circumstances of each case.

Company Law — Winding Up — Just and equitable ground (s.222(f))

On a petition under section 222(f) of the Companies Act, the court need only satisfy itself whether it is just and equitable to wind up the company; persistent failure of the directors and shareholders to agree and to pursue the company's objects can warrant winding up.

Succession & Estates — Rule against perpetuity — Validity of bequest (s.101 Succession Act)

A bequest by which the vesting of the thing bequeathed may be delayed beyond the lifetime of persons living at the testator's death offends section 101 of the Succession Act and is void; testamentary provisions vesting property in a company to administer the estate in perpetuity are invalid and unenforceable.

Legislation cited (7)

Companies Act (Cap. 110) s.222(f)
Succession Act s.101
Civil Procedure Rules (S.I No.71-1) Order 19 r.1
Companies (Winding Up) Rules r.5
Companies (Winding Up) Rules r.201
Judicature (Supreme Court Rules) Directions r.82(1)
Court of Appeal Rules r.30(1)

Cases cited (3)

Kifamunte Henry v Uganda (Criminal Appeal No. 10 of 1997)
Attorney General v Leveller Magazine Ltd [1979] AC 440
Uganda Breweries Limited v Uganda Railways Corporation (Civil Appeal No. 6 of 2001)

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