Wakilii

Chen & 2 Others v Zhang & Another (Miscellaneous Application 822 of 2024)

High Court · [2024] UGHCCD 196 · 2024 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for contempt of court arising from Miscellaneous Application No. 416 of 2022 which in turn arose from Civil Suit No. 220 of 2022
Decision
Respondents found in contempt and ordered to remit funds, return vehicles, pay damages totalling UGX 500,000,000, and face committal to civil prison if vehicles not returned

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Holding

The High Court found the respondents in civil contempt for wilfully disobeying a temporary injunction restraining them from operating company bank accounts and transferring company vehicles. The respondents withdrew UGX 2,927,332,371 from company accounts and transferred two vehicles despite knowledge of the court order, including after the Court of Appeal dismissed their stay application. The court ordered remittance of the withdrawn funds within three months, return of the vehicles, and awarded exemplary and general damages totalling UGX 500,000,000. The respondents face committal to civil prison if they fail to return the vehicles.

Outcome

Respondents found in contempt and ordered to remit funds, return vehicles, pay damages totalling UGX 500,000,000, and face committal to civil prison if vehicles not returned

Facts

The applicants are shareholders in Entec Electrical Equipment Co Ltd along with the respondents. The applicants filed Civil Suit No. 220 of 2022 alleging breach of shareholders' cooperation agreement. On 29 September 2022, the High Court granted a temporary injunction in Misc. Application No. 416 of 2022 restraining the respondents from operating company bank accounts, transferring company vehicles, and dealing with company property pending determination of the main suit. Despite knowledge of this order and after the Court of Appeal dismissed their stay application and appeal (Civil Appeal No. 26 of 2023 and related applications), the respondents withdrew UGX 2,527,072,371 from UBA Bank and UGX 400,250,000 from Equity Bank between November 2022 and January 2024. The respondents also transferred two company vehicles (Land Cruiser VXR Registration UBD 790C and Land Cruiser Prado UBP 829K) on 30 September 2022. Police began investigating embezzlement of company funds. The applicants brought this contempt application seeking to enforce compliance with the injunction.

Issues

  1. Whether there was contempt of court order by the respondents.
  2. What remedies are available to the applicant.

Orders

  • An order directing the respondents to remit back the money they withdrew from the bank accounts in contempt of court order in the total sum of UGX 2,927,332,371 within 3 months.
  • An order directing the company vehicles Registration UBD 790C and UBP 829K which the respondents transferred in contempt of the court order be transferred back into the company names and be returned to the company.
  • An order that the above vehicles be impounded and returned to the company premises with immediate effect.
  • If the respondents fail to return the vehicles they be arrested and committed to civil prison for contempt of the court order until when the vehicles are returned.
  • An order that the respondents pay exemplary damages of UGX 200,000,000 to the applicants and general damages of UGX 300,000,000 to the company (Entec Electrical Equipment Co Ltd) for the inconvenience to the company.
  • Miscellaneous Application No. 0802 of 2024 filed by the respondents struck out.
  • Application allowed with costs to the applicants.

Rules and key headnotes

Civil Procedure — Contempt of Court — Elements — Existence of Lawful Order, Knowledge, and Disobedience
For contempt of court to be established, three elements must be proved: existence of a lawful court order, the potential contemnor's knowledge of that order, and the potential contemnor's failure to comply with the order through disobedience.
Civil Procedure — Contempt of Court — Civil Contempt Distinguished from Criminal Contempt
Civil contempt arises when there is disobedience to a judgment, order, or other court process and involves private injury. It is regarded as a form of execution and enforcement of the order alleged to have been violated to the detriment of a private party, and is remedial in nature for the benefit of a party.
Civil Procedure — Contempt of Court — Knowledge of Order — No Defence that Order Believed Null or Irregular
A party who knows of a court order, regardless of whether in that party's view the order is null or valid, regular or irregular, cannot be permitted to disobey it by reason of what that party regards the order to be. The order must be complied with in totality and it is not for that party to choose whether or not to comply.
Civil Procedure — Contempt of Court — Remedies — Committal, Fine, Sequestration, Damages, and Injunction
Civil contempt is punishable by way of committal to civil prison, by way of sequestration, by way of fine, by an injunction against the contemnor, or by an award of damages. Imprisonment for civil contempt is properly ordered where the defendant has refused to do an affirmative act required by a mandatory order, and the committal is not punishment but to compel compliance with the court order.
Civil Procedure — Contempt of Court — Public Interest in Administration of Justice
The public has a vital interest in the effective and orderly administration of justice. Any course of conduct which abuses and makes a mockery of the judicial process affects not only the parties but the interest of the public in the administration of justice. The court has the duty of protecting this public interest and the power to punish for contempt is a special inherent jurisdiction in all courts for this protection.

Legislation cited (7)

Cases cited (4)

  • Uganda Super League v Attorney General (Constitutional Application No. 73 of 2013)
  • Andre Paul Terence Ambar v Attorney General of Trinidad and Tobago [1936] AC 322
  • Stanbic Bank (u) Ltd vs. Commission General Uganda Revenue Authority
  • Re Contempt of Dougherty 429, Michigan 81, 97 (1987)

Full judgment

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Chen & 2 Others v Zhang & Another (Miscellaneous Application 822 of 2024) [2024] UGHCCD 196 (20 November 2024)
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.