Mukwano Enterprises Limited v Ranchhobhai & Another (Civil Application 16 of 2019)

Supreme Court · [2021] UGSC 39 · 2021 Application Granted ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

Application to the Supreme Court for correction of accidental errors in a prior ruling under rules 2(2) and 35(1) of the Judicature (Supreme Court Rules) Directions

Decision

Accidental slip in the prior order corrected and additional consequential orders made, including removal of the liquidator

The full judgment

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Holding

The court corrected an accidental slip in its earlier ruling in Civil Application No. 16 of 2019. Order 3 had wrongly directed that, where return of the recovered plant and machinery was impracticable, their replacement value of UGX 11,944,127,000 be paid to the first respondent. The court held that its true intention was for the recovered properties — unlawfully disposed of by the liquidator — to be restored to African Textile Mills Ltd (in liquidation), on whose behalf the shareholders' derivative suit was brought, not to the liquidator who had perpetrated the fraud. Exercising its powers under rule 2(2) to achieve the ends of justice, the court additionally removed Mr Sylvester Henry Wambuga as liquidator and directed the shareholders to complete the liquidation and recover what had been decreed.

Facts

The court had previously ruled in Civil Application No. 16 of 2019, maintaining its judgment in Civil Appeal No. 6 of 2017 with clarifications and directing the Applicant to return plant and machinery to African Textile Mills Ltd (in liquidation), failing which to pay UGX 11,944,127,000 as replacement value. The recovered properties had been unlawfully disposed of by the liquidator, Mr Sylvester Henry Wambuga, against whom the shareholders had brought a derivative suit on behalf of the company. Through an accidental slip, the earlier Order 3 directed that the replacement value be paid to the first respondent rather than to the company in liquidation. The court returned to correct this error so that the recovered properties and their value would be restored to the company itself, and not to the liquidator who had perpetrated the fraud.

Issues

Whether the court's prior order contained an accidental slip warranting correction under rule 35(1) of the Judicature (Supreme Court Rules) Directions.
Whether the court should exercise its powers under rule 2(2) to make additional orders necessary to give effect to its decision.

Orders

Order 3 of the ruling in Civil Application No. 16 of 2019 is corrected to direct that, where return of the plant and machinery is not immediately practicable, the Applicant shall pay to African Textile Mills Limited (in liquidation) the equivalent of UGX 11,944,127,000 per the valuation certificate dated 14 May 2004.
The 2nd respondent, Mr Sylvester Henry Wambuga, is removed as liquidator of African Textile Mills Ltd (in liquidation) with immediate effect.
The shareholders are directed to take appropriate steps to complete the liquidation process and recover what has been decreed to African Textile Mills Ltd (in liquidation).

Key headnotes

Civil Procedure — Correction of Errors — Slip Rule — Effect to Court's Intention

Under rule 35(1) of the Judicature (Supreme Court Rules) Directions, a clerical or arithmetical mistake, or an error arising from an accidental slip or omission, may be corrected by the court at any time, whether before or after the judgment is embodied in an order, so as to give effect to the court's true intention when judgment was given.

Company Law — Shareholders' Derivative Suit — Recovery of Company Property

Property recovered in a shareholders' derivative suit belongs to the company on whose behalf the suit was brought, and may not be restored to a liquidator who perpetrated the fraud against the company.

Civil Procedure — Inherent Powers of the Court — Rule 2(2) — Ends of Justice

Under rule 2(2) of the Judicature (Supreme Court Rules) Directions, the court may make such orders as are necessary to achieve the ends of justice or to prevent abuse of its process, including removing a liquidator who has acted fraudulently and directing the completion of the liquidation.

Legislation cited (2)

Judicature (Supreme Court Rules) Directions rule 2(2)
Judicature (Supreme Court Rules) Directions rule 35(1)

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