Wakilii

British American Tobacco Ltd v Muwema & 4 Ors (Civil Suit No. 751 of 2014)

High Court · [2020] UGCOMMC 35 · 2020 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of money had and received following failure of a settlement agreement
Decision
Plaintiff's claim partly allowed with judgment for recovery of UGX 2,748,804,076 plus interest against the 1st and 2nd Defendants only

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that the Plaintiff is entitled to recover money paid to the 1st and 2nd Defendants' law firm following failure of consideration arising from an illegal settlement deed that was never validated by the Court of Appeal or Supreme Court. The 1st and 2nd Defendants are jointly liable for UGX 2,748,804,076 as money had and received, plus interest at 6% per annum from the date of receipt until full payment. The 3rd, 4th, and 5th Defendants, who joined the partnership after the sums were received, are not liable.

Outcome

Plaintiff's claim partly allowed with judgment for recovery of UGX 2,748,804,076 plus interest against the 1st and 2nd Defendants only

Facts

The Plaintiff paid UGX 4,600,000,000 to the Defendants' law firm pursuant to a Deed of Settlement dated 27 July 2010 to settle a pending Court of Appeal case involving 2,838 tobacco farmers represented by the Defendants. The Court of Appeal delivered judgment on 12 August 2010 in favour of the farmers without endorsing the settlement. The Plaintiff appealed to the Supreme Court, which dismissed the appeal and ordered the Plaintiff to pay UGX 14,364,358,042 directly to the farmers. The Supreme Court found the Deed of Settlement invalid as it had not been sealed by the Court of Appeal, and advised the Plaintiff to recover the sums paid to the law firm. The Defendants partially refunded UGX 630,000,000 and claimed UGX 921,195,924 had been paid to farmers. The Defendants asserted a lien for unpaid legal fees under an advocate-client remuneration agreement. At the time monies were paid, only the 1st and 2nd Defendants were partners; the 3rd, 4th and 5th Defendants joined the firm on 1 February 2011.

Issues

  1. Whether the Plaintiff has an actionable claim in law and is entitled to a refund of monies paid to the firm of Muwema & Mugerwa Advocates.
  2. Whether the Defendants have a lien and set-off on the sums being held on the account.
  3. Whether the payment of UGX 630,000,000 was paid to solely discharge the 2nd Defendant.
  4. Whether there was a discharge of the 2nd Defendant.
  5. Whether the Defendants are liable to refund the sum of UGX 921,195,924 which was paid out to the farmers.
  6. Whether the Plaintiff is entitled to the remedies claimed.

Orders

  • The Plaintiff is entitled to recover from the 1st and 2nd Defendants a balance of Uganda Shillings Two Billion Seven Hundred and Forty-Eight Million Eight Hundred and Four Thousand and Seventy-Six (UGX 2,748,804,076).
  • The Plaintiff is awarded interest at the court rate of 6% per annum on the balance of UGX 2,748,804,076 from the date it was received till payment in full.
  • Siraj Ali, Brian Kabayiza and Terrence Kavuma (3rd, 4th and 5th Defendants) are discharged from any liabilities as they became partners only on 1st February 2011 after the monies were paid.
  • The 1st and 2nd Defendants to meet the costs of the suit in equal amounts.

Rules and key headnotes

Money Had and Received — Failure of Consideration — Recovery of Payments under Invalid Settlement
Where money is paid pursuant to a settlement agreement that is never validated by the court and is subsequently declared illegal, the consideration fails entirely and the payer is entitled to recover the money as money had and received on grounds of unjust enrichment.
Illegality — Settlement of Pending Appeal — Consent Orders
An appellate court will not allow an appeal to be settled by consent where the effect would be to reverse the judgment of the lower court without the appeal being heard on the merits. A deed of settlement and consent order attempting to settle an appeal which has not been endorsed or sealed by the court are illegal and of no legal effect.
Ex Turpi Causa Non Oritur Actio — Recovery of Money Paid under Illegal Transaction
The principle ex turpi causa non oritur actio does not bar recovery where the party seeking restitution did not originate or orchestrate the illegality but was advised or misled by the other party who had a professional duty to know better. Where an advocate's law firm orchestrates an illegal settlement, the client who participated in good faith may recover money paid.
Partnership — Liability of Partners — Section 9 Partnership Act
Under section 9 of the Partnership Act 2010, a partner is liable jointly with other partners for all debts and obligations incurred while he or she is a partner. A partner who joins the firm after the debt was incurred is not liable for that pre-existing debt by virtue of section 19 of the Act.
Advocates — Lien on Client Funds — Section 46 Advocates Act
An advocate's law firm has no locus standi to unilaterally apportion for itself legal costs and fees from client funds without going through the bill of taxation process. A law firm cannot claim a statutory lien under section 46 of the Advocates Act on funds paid to it in error by a third party who is not its client, even if the firm has unpaid costs owed by its actual clients.
Interest on Judgment Debt — Section 26 Civil Procedure Act
Under section 26 of the Civil Procedure Act, the court has discretion to award interest on a liquidated claim where a party has been kept out of its money. An award of interest at 6% per annum is reasonable where monies have been illegally withheld following failure of consideration.

Legislation cited (6)

Cases cited (14)

  • Bulasio Konde v Bulandina Nankya & Another (Civil Appeal No. 7 of 1980)
  • Active Automobile Spares Ltd v Crane Bank and Another (Supreme Court Civil Appeal No. 21 of 2001)
  • Shell Uganda Limited & 9 Others v Muwema and Mugerwa Advocates & Solicitors (Civil Appeal No. 2 of 2013)
  • Clothlink Uganda Limited v African Trade Investments Fund Limited & Another (High Court Civil Suit No. 234 of 2010)
  • Nipun Norratum Bhatia v Crane Bank Limited (Civil Appeal No. 75 of 2006)
  • Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32
  • Kensheka v Uganda Development Bank (Civil Suit No. 469 of 2011)
  • Dr. James Kashugyera Tumwine, & Another vs Willie Magara & Another
  • Majid Akuze v Centenary Rural Development Bank (Civil Suit No. 87 of 2015)
  • Jamba Soita v David Salaam (High Court Civil Suit No. 4000 of 2005)
  • Legal Brain Trust and Others v Hassan Bassajabalaba and others (Constitutional Petition No. 4 of 2012)
  • British American Tobacco Uganda Limited v Sedrach Mwijakubi & Others (Court of Appeal Civil Appeal No. 50 of 2008)
  • British American Tobacco Uganda Limited v Sedrach Mwijakubi & Others (Supreme Court Civil Appeal No. 1 of 2012)
  • British American Tobacco Uganda Limited v Sedrach Mwijakubi & Others (Supreme Court Civil Application No. 7 of 2013)

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

British American Tobacco Ltd v Muwema & 4 Ors (Civil Suit No. 751 of 2014) [2020] UGCommC 35 (25 September 2020)
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.