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Erimu Company Limited and Others v Seroma Limited and Others (Miscellaneous Application No. 390 of 2025)

High Court · [2025] UGCOMMC 173 · 2025 Application Granted — Contempt Established AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for contempt of court arising from alleged violation of interim stay of execution order in underlying civil suit
Decision
Respondents found guilty of contempt; ordered to provide security for purchase price, pay fine of UGX 100,000,000, and face potential civil imprisonment for non-compliance

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Holding

The court found the respondents guilty of contempt for violating an interim stay of execution by transferring suit property to a third party. The stay order froze the legal consequences of a decree declaring the 1st respondent a bona fide purchaser, and the transfer altered the status quo the court sought to preserve. Directors of a company can be held personally liable for contempt when acting as agents or collaborators in violating court orders. The court ordered the respondents to provide security for the purchase price, pay a fine of UGX 100,000,000, and face potential civil imprisonment if non-compliant.

Outcome

Respondents found guilty of contempt; ordered to provide security for purchase price, pay fine of UGX 100,000,000, and face potential civil imprisonment for non-compliance

Facts

The applicants filed Civil Suit No. 673 of 2016 concerning alleged illegal and fraudulent sale of securities. On 18 February 2022, the court delivered judgment declaring the respondents bona fide purchasers for value of the suit properties. The applicants filed Miscellaneous Application No. 304 of 2022 seeking stay of execution pending appeal. On 9 May 2022, the court issued an interim order of stay of execution, which was extended on 27 May 2022 pending determination of the stay application. The 1st respondent filed an affidavit stating the status quo was that it occupied the property for storage and parking. On 29 January 2025, when the stay application came up for hearing, the 2nd applicant discovered that on 20 September 2023, the 2nd and 3rd respondents as directors of the 1st respondent had transferred the suit property (Kyadondo Block 254 Plot 2333) to DL Properties Limited, altering the status quo protected by the interim stay order.

Issues

  1. Whether the respondents violated the interim stay of execution order dated 9 May 2022 by transferring the suit property to DL Properties Limited on 20 September 2023.
  2. Whether the 2nd and 3rd respondents, as directors of the 1st respondent, can be held personally liable for contempt of court.
  3. Whether the transfer of the suit property constituted a deliberate and willful breach of the court order.
  4. What sanctions should be imposed for contempt of court.

Orders

  • The Respondents are found guilty of contempt of court.
  • The Respondents jointly and severally are ordered to tender into this court a security for the entire purchase price of the suit property by way of either an unconditional payment security or an unconditional payment guarantee within thirty (30) days of this ruling.
  • The Respondents should tender in a copy of the purchase agreement with DL properties within thirty (30) days of this ruling.
  • The Respondents jointly and severally are ordered to pay a fine of UGX 100,000,000 as a fine for contempt of court within thirty (30) days of this ruling.
  • In the event that any of the above orders are not complied with, the 2nd and 3rd Respondents, together with the Principal Officers comprising of the controlling mind of the 1st Respondent shall be committed to civil prison for a period of six (6) months except if cause is shown as to why any of them should not be so committed.
  • The said persons herein shall be heard on proceedings to show cause why they should not be committed for contempt of court prior to any such committal.
  • The Respondents shall meet the costs of this application.

Rules and key headnotes

Contempt of Court — Civil Contempt — Elements
To establish civil contempt, the applicant must prove beyond reasonable doubt that: (i) a valid court order existed; (ii) the alleged contemnor had knowledge of the order; (iii) the alleged contemnor had the ability to comply with the order but violated it knowingly; and (iv) the alleged contemnor lacks just cause or excuse for the violation.
Contempt of Court — Knowledge of Order — Inference from Conduct
Knowledge of a court order may be inferred from circumstances showing awareness, including willful blindness or conduct demonstrating knowledge. Where a party fails to attend a hearing without justification and an order is pronounced, that party is deemed to have been aware of the order. A company cannot claim ignorance of an order when its purported representative appeared in court and the company subsequently filed documents in compliance with directions given at that hearing.
Contempt of Court — Directors' Liability — Corporate Veil
Directors of a company who, with knowledge of a court order binding the company, undertake actions on behalf of the company that violate the order cannot escape personal liability for contempt by asserting they were not parties to the proceedings. Representatives, agents, or third parties who knowingly collaborate, assist, or facilitate violation of an in personam order are liable for contempt alongside the principal party.
Stay of Execution — Effect on Property Dealings
An interim stay of execution operates to preserve the status quo and temporarily nullifies a party's ability to act on a decree. Where a decree declares a party the lawful proprietor of land and a stay of execution is granted pending appeal, the stay prohibits the party from transferring the property to third parties, notwithstanding that the party is the registered proprietor. The stay freezes the legal consequences of the decree and prohibits any steps to enforce or benefit from the decree until the stay is lifted or the appeal resolved.
Contempt of Court — Negative Orders — Executability
A decree declaring a party a bona fide purchaser for value is not a negative order. Such a decree declares the rights of the party and effectively bars the entire world from contesting the party's ownership except on different facts. A stay of execution can properly issue in respect of such a decree.
Contempt of Court — Willful Breach — Deliberate Alteration of Status Quo
A deliberate transfer of property subject to a stay of execution, undertaken with knowledge of the stay order and without evidence of misapprehension or good faith reliance on legal advice, constitutes willful contempt. The court may presume intention from the acts or omissions of the alleged contemnor. Where no evidence is led to show the transfer was not deliberate or was undertaken in good faith, the court may find the breach was deliberate.
Contempt of Court — Sanctions — Proportionality and Effectiveness
Upon finding contempt, the court may impose coercive and compensatory sanctions including fines, compensation, and imprisonment. Commitment to civil prison should be confined to brazen or malevolent contempt where other sanctions would be insufficient. The court should consider the character, nature, and magnitude of harm occasioned and the probable effectiveness of the sanction. Where property has been transferred to a third party not before the court, the court may order security for the purchase price and impose a fine, with imprisonment as a sanction for non-compliance rather than as an immediate penalty.

Legislation cited (3)

Cases cited (30)

  • Ssempebwa & Ors v Attorney General (2019) 1 EA 546
  • George Okwonga & Anor v Okello James (Miscellaneous Application No. 132 of 2021)
  • Betty Kizito v Dickson Nsubuga & 6 Others (Supreme Court Cases Nos. 25 & 26 of 2021)
  • Richard Odoi Edone v UEGL (Miscellaneous Application No. 1088 of 2022)
  • Ekau David v Dr Jane Ruth Aceng (Miscellaneous Application No. 746 of 2018)
  • Jane Sempebwa v Ndibalekera Magdalena (Miscellaneous Application No. 176 of 2019)
  • Goyal v Goyal (2009) 2 EA 143
  • Hajjat Amina Mulagusi v Constance Pade (Civil Appeal No. 28 of 2010)
  • Erasmus Matsiko v John Imaniraguha & Ors (Miscellaneous Application No. 1481 of 2016)
  • Bishop Patrick Baligasiima v Kiiza Daniel & Ors (Miscellaneous Application No. 1495 of 2016)
  • Janet Rubadiri & Ors v Charles Mutungi (Miscellaneous Application No. 17 of 2023)
  • Beatrice Achola v Nancy Wilson Oryema (Miscellaneous Application No. 89 of 2021)
  • Welmond Plastics Limited & Ors v Sathick Sahul & Anor (Miscellaneous Application No. 2844 of 2023)
  • Colleb Katoroogo & Anor v GROFIN SGB Uganda Limited (Miscellaneous Application No. 534 of 2023)
  • Samuel Kamau v Alan L Zukas & Ors (Miscellaneous Application No. 291 of 2021)
  • Lennard's Carrying Co. Ltd v Asiatic Petroleum Co. Ltd (1915) AC 705
  • Export Trading Company Limited v OBN Produce and Supply Company Limited (Miscellaneous Application No. 1871 of 2024)
  • International Development Corporation of South Africa v Aya Investments Limited (Miscellaneous Application No. 2863 of 2023)
  • Housing Finance Bank and Another v Musisi (Civil Appeal No. 158 of 2010)
  • Chuck v. Creemer (I Corp Jemp 342)
  • Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR
  • Wild Life Lodges Ltd v County Council of Narok and Another [2005] 2 EA 344
  • Kare Distributors Ltd & Anor v NCBA Bank Uganda Limited (Civil Appeal No. 100 of 2023)
  • Charles Ssemwanga v Nazziwa Aisha & Ors (Civil Appeal No. 20 of 2022)
  • Exclusive Estate Limited v Kenya Posts and Telecommunications Corporation and Another [2005] 1 EA 53
  • Aya Investments Limited v International Development Corporation Of South Africa (Miscellaneous Application No. 3063 of 2023)
  • Kazoora v Rukuba (Supreme Court Civil Appeal No. 13 of 1992)
  • Bin-It Services Limited v Kampala Capital City Authority (KCCA) and Executive Director, KCCA (Miscellaneous Application No. 593 of 2019)
  • Wong To Yick Wood Lock Ointment Ltd v Yue Hwa Cosmetic Ltd & Anor [2024] HKCFI 1868
  • Olympic Council of Asia v Novans Jets LLP (2023) EWHC 276

Full judgment

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Erimu Company Limited and Others v Seroma Limited and Others (Miscellaneous Application No. 390 of 2025) [2025] UGCommC 173 (13 June 2025)
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.