Wakilii

Kisembo v Busaiga Co-Operative Savings & Credit Society Ltd and Another (HCT-01-CV-CA-0012-2024)

High Court · [2025] UGHC 1154 · 2025 Appeal Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from Chief Magistrate's Court ruling sustaining preliminary objection and dismissing suit for being prematurely filed
Decision
Suit dismissal upheld; dispute referred to arbitration under Cooperative Societies Act

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court held that a dispute between a cooperative society member and the society over land sale agreements deposited as security for a loan obtained by the society to further its credit operations touches the business of the cooperative within Section 73(1)(b) of the Cooperative Societies Act and must be referred to arbitration before being litigated in ordinary courts. The appeal was competently filed within time under Section 79(2) of the Civil Procedure Act. The dismissal of the suit was upheld but the costs order was varied to each party bearing own costs.

Outcome

Suit dismissal upheld; dispute referred to arbitration under Cooperative Societies Act

Facts

The Appellant, a member and shareholder of the 1st Respondent SACCO, instituted a suit seeking recovery of two original land sale agreements allegedly taken by the 1st Respondent's agents in 2016. The 1st Respondent pleaded that the Appellant had voluntarily granted Powers of Attorney to mortgage his land as security for a loan the SACCO obtained from the 2nd Respondent (Microfinance Support Centre) in 2014 to further its credit operations, and that the sale agreements were deposited with the 2nd Respondent as part of that transaction. The Appellant did not file a reply to the defence. The 1st Respondent raised a preliminary objection that the suit was barred by Section 73(1)(b) of the Cooperative Societies Act, which requires disputes touching the business of a cooperative society to be referred to arbitration. The Chief Magistrate's Court sustained the objection and dismissed the suit as prematurely filed, awarding half costs to the Respondents. The Appellant appealed.

Issues

  1. Whether the appeal was competently filed within time under Section 79 of the Civil Procedure Act.
  2. Whether the learned Trial Magistrate erred in finding that the recovery of the Appellant's sale agreements touches the business of the Co-operative Society within the meaning of Section 73(1)(b) of the Cooperative Societies Act.
  3. Whether the learned Trial Magistrate erred in dismissing the Appellant's suit with costs to the Respondents.

Orders

  • The appeal is allowed in part.
  • The Ruling and Orders of the Trial Magistrate dated 21st August 2024, sustaining the preliminary objection and dismissing Civil Suit No. FPT-00-CV-CS-0172 of 2022, are upheld.
  • The dispute between the parties is referred to arbitration in accordance with Section 73(1)(b) of the Cooperative Societies Act, Cap. 107.
  • The Trial Magistrate's order awarding half the taxed costs to the Respondents is set aside; instead, each party shall bear their own costs.
  • No order is made as to the costs of this appeal in the High Court, given the partial success of the appeal by each party.

Rules and key headnotes

Civil Procedure — Appeals — Time for Filing — Exclusion of Time for Preparation of Record
Under Section 79(2) of the Civil Procedure Act, an appellant who applies for a copy of the decree, judgment or proceedings within the prescribed time for appealing is entitled to have excluded from the computation of time the period certified by the court as having been required for preparation and delivery of such copies, and where such exclusion brings the filing within thirty days, the appeal is competent.
Administrative Law — Cooperative Societies — Mandatory Arbitration — Scope of 'Business of a Registered Society'
The expression 'touching the business of a registered society' in Section 73(1)(b) of the Cooperative Societies Act must be interpreted broadly to cover matters connected to or arising out of the society's operations, including transactions with members undertaken in pursuit of its objectives, and covers any activity reasonably incidental to the business of savings, credit, or other core functions of the society.
Administrative Law — Cooperative Societies — Mandatory Arbitration — Disputes Over Security Documents
A dispute between a cooperative society member and the society over land sale agreements deposited as security for a loan obtained by the society to further its credit operations necessarily touches the business of the cooperative within Section 73(1)(b) of the Cooperative Societies Act, and must be referred to arbitration before being litigated in ordinary civil courts.
Civil Procedure — Pleadings — Failure to File Reply — Deemed Admission
Where a defendant pleads facts in a Written Statement of Defence and the plaintiff does not file a reply traversing those facts, the facts are deemed admitted under Order 8 Rule 3 of the Civil Procedure Rules, and the court may rely on them in determining preliminary objections.
Administrative Law — Cooperative Societies — Regulatory Compliance — Effect on Jurisdiction
Whether or not a cooperative society obtained the Registrar's approval for borrowing is a matter of regulatory compliance, not of jurisdiction under Section 73 of the Cooperative Societies Act; even if the borrowing were irregular, a dispute arising out of activities undertaken in the course of conducting the cooperative's financial operations would still touch the business of the cooperative.
Civil Procedure — Costs — Discretion to Depart from General Rule — Dismissal on Preliminary Objection
Where a suit is dismissed on a preliminary objection involving the interpretation of a statutory provision that admits of reasonable debate, and the plaintiff instituted the suit in good faith without vexatiousness or dilatory tactics, the court may exercise its discretion under Section 27(2) of the Civil Procedure Act to order each party to bear its own costs rather than awarding costs to the successful party.

Legislation cited (9)

Cases cited (5)

  • Mukisa Biscuit Manufacturing Co. v West End Distributors Ltd (Court of Appeal for Eastern Africa No. 696 of 1969)
  • Kamwine Daphine v Tumusiime Francis and Others (Civil Suit No. 0096 of 2021)
  • Nelson Kawalya v Sebanakita Hamis (Miscellaneous Application No. 1534 of 2020)
  • Kellia Obaya and Another v Ovuru Stephano (High Court Civil Appeal No. 002 of 2015)
  • Ephraim Rwabu Kamuntu v Attorney General of Uganda (High Court Civil Suit No. 38 of 2016)

Full judgment

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

Kisembo v Busaiga Co-Operative Savings & Credit Society Ltd and Another (HCT-01-CV-CA-0012-2024) [2025] UGHC 1154 (13 October 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.