Wakilii

Kirima & 4 Others v Kabushenga (Civil Suit 18 of 2022)

High Court · [2024] UGCOMMC 295 · 2024 Preliminary Objection Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Preliminary objection to authority of advocates to represent 4th and 5th Plaintiffs
Decision
Preliminary objection dismissed; matter to proceed to hearing on merits

Observed later treatment

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Holding

Held that MMAKS Advocates was lawfully instructed by the 4th and 5th Plaintiffs. The two witnesses who instructed the advocates were validly appointed directors through company resolutions filed with URSB in 2016 and 2020. The purported removal of these directors before the suit was filed did not comply with section 195 of the Companies Act, as no special notice was issued and no opportunity to be heard was given. The removal was therefore void. A formal resolution to commence legal proceedings is not mandatory provided directors agree in good faith to instruct counsel.

Outcome

Preliminary objection dismissed; matter to proceed to hearing on merits

Facts

The Plaintiffs filed civil suit no. 18 of 2022. The Defendant raised a preliminary objection that the suit was commenced without board authority and that MMAKS Advocates lacked instructions to represent the 4th and 5th Plaintiffs. The Defendant contended that the two directors who instructed MMAKS (PW1 and PW2) had been suspended or removed before the suit was filed. PW1 was appointed as director of the 4th and 5th Plaintiffs on 10 June 2020 through resolutions registered with URSB. PW2 was appointed director in 2016 through registered resolutions. The Defendant produced company forms filed with URSB on 3 November 2021 and 26 October 2022 purporting to appoint new directors and notify the removal of PW1 and PW2. The Defendant also produced evidence of resolutions dated 30 October 2021 and 3 April 2022 purportedly suspending PW1 and PW2 and resolving that the suit was not sanctioned. Both PW1 and PW2 testified they were unaware of any resolutions removing them and had never resigned. The suit was filed on 12 January 2022.

Issues

  1. Whether MMAKS Advocates was duly instructed to represent the 4th and 5th Plaintiffs when filing High Court Civil Suit No. 18 of 2022.

Orders

  • Preliminary objection dismissed.
  • MMAKS Advocates found to have been duly instructed.
  • Suit to be set down for hearing on merits at the earliest.

Rules and key headnotes

Company Law — Directors — Removal of Directors — Compliance with Section 195 Companies Act
A company may remove a director by ordinary resolution before expiry of the director's term, but section 195 of the Companies Act requires that special notice be given to the director and the director must be afforded an opportunity to be heard. Removal effected without compliance with these mandatory requirements is void.
Civil Procedure — Legal Representation — Authority of Advocates to Commence Proceedings on Behalf of a Company
An advocate may lawfully commence proceedings on behalf of a company where instructed by its directors acting in good faith. A formal board resolution authorising commencement of legal proceedings is not a mandatory prerequisite, provided the directors who manage the company's day-to-day affairs agree to instruct counsel.
Company Law — Directors — Power to Bind the Company and Instruct Counsel
Directors of a company have the power under section 52(1) of the Companies Act to authorise others to bind the company in good faith and to give instructions on behalf of the company to commence legal proceedings.

Legislation cited (8)

Cases cited (7)

  • Fang Min v Uganda Hui Neng Mining Ltd & Others (High Court Civil Suit No. 318 of 2016)
  • Serembe Mark v Isanga Emmanuel & 3 Others (Companies Cause No. 27 of 2004)
  • Kenya Commercial Bank Ltd v Stagecoach Management Ltd (Civil Case No. 45 of 2012)
  • East African Safari Air Ltd v Anthony Ambaka & Another (Civil Appeal No. 42 of 2007)
  • Rev Dr Hamlet Kabushenga Mbabazi & Another v Great Lakes Regional University (Miscellaneous Application No. 904 of 2021)
  • Moneylenders Association of Uganda Limited & MK Financiers Limited v Uganda Registration Services Bureau (High Court Miscellaneous Application No. 1 of 2019)
  • Rubaga Building Co Ltd v Gapal Devsi Vekari & Another (Civil Suit No. 534 of 2014)

Full judgment

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

Kirima & 4 Others v Kabushenga (Civil Suit 18 of 2022) [2024] UGCommC 295 (6 May 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.