Wakilii

A-tec Industries (Uganda) Ltd & Anor v Gunter & (Misc. Application No.55 2012)

High Court · [2012] UGHC 248 · 2012 Objection Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Objection proceedings arising from attachment and execution following judgment in Civil Suit No. 57 of 2008
Decision
Attachment and execution to proceed. Goods remain subject to warrant of attachment.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court dismissed the objection and allowed the attachment to proceed. A Memorandum of Understanding cannot effect assignment of a sublease without a deed and registration. The objector company lacked capacity to contract on 18 September 2008, having been incorporated only on 19 September 2009. Corporate possession for attachment purposes requires actual or constructive possession at the date of attachment; an equitable assignee without registration holds only a licence terminable at will. The court found the objector company was effectively a holding company for the judgment debtors and the same persons were behind both entities.

Outcome

Attachment and execution to proceed. Goods remain subject to warrant of attachment.

Facts

The judgment creditors obtained judgment against the judgment debtors in Civil Suit No. 57 of 2008 on 8 August 2011. A warrant of attachment was issued on 15 February 2012 commanding attachment of the judgment debtors' moveable property, including a rotating furnace, grinding mill, and copper slugs at plot M25 Masese, Jinja. On 6 March 2012 the objector company, A-Tec Industries (Uganda) Ltd, filed an objection claiming ownership and possession of the attached goods. The objector claimed it purchased the rotating furnace from Turkey in January 2012 for €123,969 and that the other items had been transferred to it by the judgment debtors pursuant to a Memorandum of Understanding dated 18 September 2008. Andrew Bagaye, who was counsel for the judgment debtors in the main suit, deposed to the affidavit in his capacity as company secretary of the objector. The judgment creditors opposed the objection on grounds that the objector was not in possession of the property, the MOU predated the objector's incorporation, and the objector and judgment debtor were the same persons through their shareholding structure.

Issues

  1. Whether on the date of attachment the judgment debtor or the objector was in possession of the attached property.
  2. Whether the Memorandum of Understanding dated 18 September 2008 effected a legally binding assignment of the sublease and goods to the objector.
  3. Whether the objector company had capacity to enter into the Memorandum of Understanding on 18 September 2008, given that it was incorporated on 19 September 2008.
  4. Whether the company secretary had authority to commence proceedings on behalf of the objector company without a board resolution.
  5. Whether the objector was in possession of the rotating furnace as evidenced by bills of lading.
  6. Whether the objector and judgment debtor companies were the same people for purposes of attachment.

Orders

  • Objectors' application dismissed.
  • Costs of the application awarded to the judgment creditors.
  • Wasted costs order made against Andrew Bagaye personally under Order 98 CPR and the court's inherent powers for misconduct and abuse of process.

Rules and key headnotes

Company Law — Authority to Commence Proceedings — Board Resolution Requirement
A company secretary has no power to commence proceedings on behalf of a company without a resolution of the directors authorising such proceedings. An affidavit not sworn on behalf of the company and unsupported by board resolution or ratification is defective and the proceedings are unauthorised.
Contract Law — Memorandum of Understanding — Legal Effect
A Memorandum of Understanding should only be used to embody the understanding of parties in principle without creating rights or obligations of legally binding nature unless the MOU specifically stipulates legal effect. It is a gesture of goodwill with no legal effect in the commercial domain and cannot be enforced by action. The term 'understanding' connotes at most a gentleman's agreement.
Land & Property — Assignment of Sublease — Form Requirements
Any assignment or grant of a lease must be by deed. A mere caveat on the registered title is not evidence of assignment of a sublease. In the absence of a deed there is no legal assignment. Until registration the assignment is only equitable, and an equitable assignee cannot be in possession of the demised premises.
Land & Property — Licence to Occupy — Possession for Attachment
An equitable assignee without registered title has only a licence to occupy pending registration. A licence does not pass any interest in land, does not amount to a demise, and does not give exclusive right to the licensee. It can be determined at will. A licensee cannot have physical or constructive possession for purposes of attachment and execution.
Company Law — Pre-incorporation Contracts — Capacity
A company cannot enter into a binding agreement before it is incorporated. An agreement purportedly entered into by a company on a date preceding its certificate of incorporation is void for lack of capacity. The date of incorporation shown on the certificate of incorporation is conclusive evidence of when the company came into existence.
Civil Procedure — Objection to Execution — Test for Possession
In objection proceedings under Order 22 CPR, the sole question is whether on the date of attachment the judgment debtor or the objector was in possession, or whether the debtor held the property on trust for the judgment debtor or another person. Questions of legal rights and title are relevant only insofar as they affect the decision on possession. Where an objector and judgment debtor are effectively the same persons through shareholding and holding company structures, property possessed by the objector is held on account of the judgment debtor.
Civil Procedure — Wasted Costs — Advocate Misconduct
Where an advocate commences proceedings on behalf of a company without proper authority, fails to disclose material facts, and pursues futile objections that amount to abuse of process, the court may exercise its inherent powers under Order 98 CPR to make a wasted costs order against the advocate personally. Such orders serve as a deterrent and send a clear message that the courts will not countenance manufactured cases.

Legislation cited (13)

  • Judicature Act s.33
  • Civil Procedure Rules O.22 r.55(1)
  • Civil Procedure Rules O.22 r.55(2)
  • Civil Procedure Rules O.22 r.56
  • Civil Procedure Rules O.22 r.57
  • Civil Procedure Rules O.52 r.1
  • Civil Procedure Rules O.52 r.3
  • Civil Procedure Rules O.98
  • English Law of Property Act 1925 s.40
  • English Law of Property Act 1925 s.52
  • Law of Property (Miscellaneous Provisions) Act 1989 s.2
  • English Charging Orders Act 1979 s.3
  • Carriage of Goods by Sea Act 1971

Cases cited (9)

  • Harilal and Co v Buganda Industries Ltd (High Court 1960)
  • Milner v Percy Bilton [1966] 2 All ER 894
  • Grossman v Hooper [2001] All ER (D) 245 (Apr)
  • Brown and Root Technology Ltd v Sun Alliance and London Assurance Co Ltd [2001] Ch 733
  • Prompt Facilities Ltd v Richard Onen and Joyce Ataro Kitgum (Misc. Application No. 25 of 2008)
  • Uganda Mineral Waters Ltd v Amin Piran and Kampala Minerals Ltd (Misc. Application No. 531 of 1995)
  • Dainter Co Ltd v Continental Tyre and Rubber Co (Great Britain) Ltd [1926] 2 AC 307
  • Moline v London, Birmingham, and Manchester Insurance Co [1902] KB 589
  • Trucks & Spares Ltd v Maritime Agencies (Southampton) Ltd [1951] 2 All ER 982

Full judgment

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A-tec Industries (Uganda) Ltd & Anor v Gunter & (Misc. Application No.55_2012) [2012] UGHC 248 (20 November 2012)
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.