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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 order arising from breach of temporary injunction granted in Miscellaneous Application No. 416 of 2022
Decision
Respondents found in civil contempt and ordered to remit withdrawn funds, return company vehicles, and pay damages; respondents liable to committal to civil prison for failure to return vehicles

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Holding

The court found the respondents in civil contempt for willfully breaching a temporary injunction by withdrawing company funds totalling UGX 2,927,332,371 and transferring two company vehicles. The court ordered the respondents to remit the withdrawn funds within three months, transfer the vehicles back to the company, and pay exemplary damages of UGX 200,000,000 to the applicants and general damages of UGX 300,000,000 to the company. Failure to return the vehicles would result in committal to civil prison.

Outcome

Respondents found in civil contempt and ordered to remit withdrawn funds, return company vehicles, and pay damages; respondents liable to committal to civil prison for failure to return vehicles

Facts

The applicants and respondents are shareholders in Entec Electrical Equipment Co. Ltd. The applicants filed Civil Suit No. 220 of 2022 alleging breach of a shareholders' cooperation agreement. On 29 September 2022, the court granted a temporary injunction restraining the respondents from operating company accounts and transferring company motor vehicles. Between 15 November 2022 and 10 January 2024, the respondents withdrew UGX 2,527,072,371 from UBA Bank and UGX 400,250,000 from Equity Bank, totalling UGX 2,927,332,371. The respondents also transferred two company vehicles (Land Cruiser VXR Registration UBD 790C and Land Cruiser Prado UBP 829K) on 30 September 2022. The respondents appealed the injunction to the Court of Appeal (Civil Appeal No. 26 of 2023) and applied for stay of execution, but both the stay applications and the appeal were dismissed. An investigative audit revealed colossal losses to the company. Police were investigating embezzlement charges.

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 they 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.
  • The court shall not determine the application filed by the respondents vide Miscellaneous Application No. 0802 of 2024 since they have been found to be in contempt and the same is struck out.
  • Costs of the application awarded 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: (i) the existence of a lawful order; (ii) the potential contemnor's knowledge of the order; and (iii) the potential contemnor's failure to comply with the order (disobedience).
Civil Procedure — Contempt of Court — Civil Contempt — Nature and Purpose
A proceeding for civil contempt is regarded as a form of execution and enforcement of the order alleged to have been violated to the detriment of a private party. It is in the nature of an appeal for execution or enforcement of the court's order for the benefit of a party, and the right of a private party to move the court for civil contempt is remedial.
Civil Procedure — Contempt of Court — Knowledge of Order — Effect of Pending Appeal
A party who knows of a court order, regardless of whether that party considers the order null, valid, regular or irregular, cannot be permitted to disobey it. The order must be complied with in totality. A party cannot choose whether or not to comply with an order based on their view of its validity, even where an appeal is pending.
Civil Procedure — Contempt of Court — Sanctions — Committal, Sequestration, Fine, Injunction
Civil contempt is punishable by way of committal to civil prison, by way of sequestration, by way of fine, or by way of injunction against the contemnor. Where contempt consists in refusal to do something which the contemnor is ordered to do for the benefit of the opposite party, the contemnor may be committed until he complies with the order, not as punishment but to compel compliance.
Civil Procedure — Contempt of Court — Public Interest — Administration of Justice
Any course of conduct which abuses and makes a mockery of the judicial process and affects the interest of the public in the administration of justice is contempt of court. The rationale is about preserving and safeguarding the rule of law. The public has an interest and a vital stake in the effective and orderly administration of justice, and the court has the duty of protecting that interest.

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

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.