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Henry Wambuga ( Liquidator of African Textile Mills Limited in Liquidation) v Ranchhodbhai Shivabhai Patel and Mukwano Enterprises Limited

Supreme Court · [2025] UGSC 36 · 2025 Application Granted ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Application to recall and review the Supreme Court's own judgment and rulings under rules 2(2) and 35(1) of the Supreme Court Rules.
Decision
Application for review granted; the impugned judgment recalled, the findings of fraud and the order removing the Applicant as liquidator set aside for denial of a fair hearing, and the 2nd Respondent held entitled to a refund of the purchase price.

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Holding

The Applicant, removed as liquidator after the Court found him guilty of fraud, sought review of the Court's 2018 judgment. Held: review under rules 2(2) and 35(1) is exceptional; 'error apparent on the face of the record', borrowed from certiorari, is not the definitive test, and a fundamental error such as denial of a fair hearing grounds review under rule 2(2). The Court had erred by raising a new issue of 'any other fraudulent conduct' and finding fraud, negligence and breach of fiduciary duty, and by removing the Applicant as liquidator, all without affording a hearing. The impugned judgment was recalled, those findings and the removal order set aside, reliance on an unproven valuation certificate set aside, and the 2nd Respondent held entitled to a refund of the purchase price.

Facts

African Textile Mills Ltd entered voluntary liquidation, with the Applicant as liquidator. To meet recalled bank debts, the Applicant in 2007 sold ATM's mortgaged suit property to the 2nd Respondent for US$1,200,000 without a special resolution of members. The 1st Respondent and its director sued, alleging the sale was fraudulent, at an undervalue, and induced by a bribe. The High Court and Court of Appeal found no fraud and held the sale valid, the 2nd Respondent being a bona fide purchaser. On second appeal (Civil Appeal No. 6 of 2017), the Supreme Court raised a new issue of 'any other fraudulent conduct', found the sale unlawful and fraudulent for want of members' consent, nullified the transfer, and through subsequent reviews ordered return of plant and machinery (valued by certificate at UGX 11,944,127,000) and removed the Applicant as liquidator. The Applicant sought review, contending he was denied a hearing on the new fraud issue and that the Court lacked power to remove him; the 2nd Respondent sought a refund of its purchase money.

Issues

  1. Whether there was a manifest illegality or fundamental error on the face of the record warranting recall and review of the Court's judgment in Civil Appeal No. 6 of 2017 and its ruling in Civil Application No. 16 of 2019.
  2. What the scope of review under rules 2(2) and 35(1) of the Supreme Court Rules is, and whether 'error apparent on the face of the record' is the definitive test for review.
  3. Whether the Applicant was denied a fair hearing when the Court raised and decided the new issue of 'any other fraudulent conduct' and removed him as liquidator without a hearing.
  4. Whether the Court had jurisdiction to remove the Applicant as a liquidator in the course of an appeal.
  5. Whether the 2nd Respondent was entitled to a refund of the purchase price following nullification of the sale.
  6. What other remedies were available to the Applicant.

Orders

  • Application for review allowed.
  • The judgment in Civil Appeal No. 6 of 2017 recalled and the decision on the purported new issue of 'any other fraudulent conduct', and the orders arising from it, set aside.
  • The findings of fraud, negligence and breach of fiduciary duty against the Applicant, and the finding requiring a liquidator's prior consent before sale, set aside.
  • The order removing the Applicant as liquidator of African Textile Mills Ltd (in liquidation) set aside for breach of the right to a fair hearing.
  • The orders made in reliance on the impugned valuation certificate set aside.
  • The 2nd Respondent held entitled to a refund of the purchase price of the suit property.

Key headnotes

Civil Procedure — Review — Finality of Judgments and the Exceptional Nature of Review
A final judgment of the Supreme Court is conclusive and beyond recall by the Court, save through the exceptional review jurisdiction conferred by rules 2(2) and 35(1) of the Supreme Court Rules.
Civil Procedure — Review — Slip Rule — Scope of Rule 35(1)
The slip rule corrects only clerical or arithmetical mistakes and errors arising from accidental slips or omissions; a mistaken appreciation of the evidence or of the law is not an accidental slip and cannot be corrected under rule 35(1).
Civil Procedure — Review — Inherent Jurisdiction under Rule 2(2)
Rule 2(2) confers a wider inherent power to recall and vary decisions to achieve the ends of justice, prevent abuse of process, and set aside null and void judgments, to be invoked only in the rarest of cases and not as a means of re-arguing a decided case.
Civil Procedure — Review — 'Error Apparent on the Face of the Record'
The test of 'error apparent on the face of the record', borrowed from the law of certiorari, is misleading and is not the definitive test for review; a fundamental error such as denial of a fair hearing may ground review under rule 2(2) even though it must be established by evidence beyond the record.
Constitutional Law — Fair Hearing (Article 28) — New Issue Raised by the Court
Where an appellate court raises a new issue of its own motion, it must afford the parties an opportunity to be heard before deciding it; resolving such an issue without a hearing is a fundamental error that vitiates the resulting decision.
Company Law — Liquidation — Removal of a Liquidator
A liquidator may not be removed otherwise than on an application of which the liquidator has notice and on which he is heard; removing a liquidator in the course of an appeal, without a hearing, is a fundamental error that cannot stand.
Restitution — Refund of Purchase Price on a Nullified Sale
Where a contract of sale is nullified, the purchaser is entitled to a refund of the purchase price; the failure to order such a refund is an accidental omission correctable on review, and the purchaser's intervening occupation does not bar the refund where no claim for mesne profits was pleaded.

Legislation cited (17)

  • Judicature (Supreme Court Rules) Directions SI 13-11 r.2(2)
  • Judicature (Supreme Court Rules) Directions SI 13-11 r.35(1) and (2)
  • Judicature (Supreme Court Rules) Directions SI 13-11 r.42(1) and (2)
  • Judicature (Supreme Court Rules) Directions SI 13-11 r.43(1) and (2)
  • Constitution of Uganda 1995 art.28
  • Constitution of Uganda 1995 art.126(2)(e)
  • Constitution of Uganda 1995 art.132(4)
  • Companies Act (Cap 110) s.276(1)
  • Companies Act (Cap 110) s.244
  • Companies Act (Cap 110) s.301
  • Insolvency Act 2011 s.2
  • Insolvency Act 2011 s.118(2)
  • Civil Procedure Act (Cap 71) s.82
  • Civil Procedure Act (Cap 71) s.99
  • Civil Procedure Rules Order 19 r.3(1)
  • Civil Procedure Rules Order 17 r.3
  • Civil Procedure Rules Order 46 r.1

Cases cited (20)

  • Orient Bank Ltd v Fredrick Zaabwe & Mars Trading Ltd (Civil Application No. 17 of 2007)
  • Zaituna Kawuma v George Mwaka Lurum (Civil Application No. 3 of 1992)
  • Livingstone Sewanyana v Martin Aliker (Civil Appeal No. 4 of 1991)
  • Isaya Kalya & 2 Ors v Moses Macekenyu (Civil Application No. 28 of 2015)
  • Elizabeth Nalumansi Wamala v Jolly Kasande & 2 Ors (Civil Application No. 29 of 2017)
  • Fang Min v Dr. Kaijuka Mutabaazi Emmanuel (Civil Application No. 6 of 2009)
  • David Muhenda v Humphrey Mirembe (Civil Application No. 5 of 2012)
  • John Sanyu Katuramu & 47 Others v Attorney General (Constitutional Application No. 1 of 2016)
  • Milly Masembe v Sugar Corporation & Anor (Civil Appeal No. 1 of 2000)
  • Ham Enterprises Ltd & 2 Ors v Diamond Trust Bank (U) Ltd & Anor (Civil Appeal No. 13 of 2021)
  • Mabirizi K. Kiwanuka v Attorney General (Miscellaneous Application No. 7 of 2018)
  • Mohamed Alibhai v W.E Bukenya Mukasa & Anor (Civil Appeal No. 56 of 1996)
  • Dr. Kizza Besigye v Yoweri Kaguta Museveni & Anor (Election Petition No. 1 of 2001)
  • Mutual Shipping Corp of New York v Bayshore Shipping Co of Monrovia, The Montan [1985] 1 ALL ER 520
  • Autodesk Inc v. Dyason (No. 2) [1993] HCA 6; (1993) 176 CLR 300
  • R v Bow Street Metropolitan Stipendry Magistrate and Ors, exparte Pinochet Ugarte (No.2) [1999] 1 ALL ER 577
  • Smith v New South Wales Bar Association (1992) 176 CLR 256
  • Nyamogo & Nyamogo v Kago [2001] 1 EA 173
  • Tibbles v SIG plc (t/a Asphaltic Roofing Supplies) [2012] 4 All ER 259
  • Sempra Metals Ltd v IRC [2007] 4 ALL ER 657
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.