Wakilii

Krone Uganda Limited v Kerilee Investments Limited (Civil Miscellaneous Application No. 306 of 2019)

High Court · [2021] UGCOMMC 16 · 2021 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside consent judgment entered in underlying civil suit HCCS No. 365 of 2015
Decision
Consent judgment set aside; matter remitted for hearing on merits

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that a consent judgment may be set aside where it is vitiated by collusion between the parties. A foreign company incorporated outside Uganda has legal personality and capacity to sue in Uganda without first registering under Part VI of the Companies Act 2012, which governs establishment of a place of business, not legal existence. The consent judgment was set aside on grounds of collusion where the parties agreed to shift liability to a third party (the Attorney General) who had not participated in the agreement, using the consent as a lawful means to achieve an unlawful purpose.

Outcome

Consent judgment set aside; matter remitted for hearing on merits

Facts

In 2015, Kerilee Investments Limited (Respondent) sued Krone Uganda Limited (Applicant) in HCCS No. 365 of 2015 for specific performance and damages. The Applicant obtained a third party notice against the Attorney General. On 12 November 2015, while the Applicant's director was bedridden and preparing for surgery in South Africa, he was approached by the Respondent's advocate and signed a consent judgment on the understanding that liability would be met by the Attorney General. The Respondent subsequently obtained certificates of order against the Attorney General for USD 975,750. The Attorney General later successfully applied to be removed as a party for want of service. The Applicant then sought to set aside the consent judgment, alleging that the Respondent was not registered in Uganda at the time of instituting the suit in 2015 (it registered in 2017), and that the consent was procured through collusion and misapprehension of facts.

Issues

  1. Whether the application is barred by law on account of the lis pendens rule.
  2. Whether the consent judgement in HCCS No. 365 of 2015 is illegal and against court policy.
  3. Whether the consent judgement in HCCS No. 365 of 2015 was entered as a result of misrepresentation and misapprehension of facts.
  4. What remedies are available to the parties?

Orders

  • The consent judgement/decree entered between the parties on 16th November 2015 is set aside.
  • HCCS No. 365 of 2015 is to be set down for hearing inter partes on its merits.
  • Each party shall bear their own costs of this application.

Rules and key headnotes

Company Law — Foreign Companies — Legal Capacity — Registration Requirements
A company incorporated outside Uganda has legal personality and capacity to sue and be sued in Uganda without first registering under Part VI of the Companies Act 2012. Registration under Part VI is required only where a foreign company wishes to establish a place of business in Uganda, not for the purpose of creating legal personality or conferring capacity to transact business or bring legal proceedings.
Civil Procedure — Consent Judgments — Grounds for Setting Aside — Collusion
A consent judgment may be vitiated and set aside where it is proved that it was obtained by collusion between the parties. Collusion connotes an agreement between two or more persons to defraud a person of his rights by the forms of law, or to obtain an object forbidden by law, or the employment of lawful means for the accomplishment of an unlawful purpose.
Civil Procedure — Consent Judgments — Collusion — Shifting Liability to Third Party
Where parties to a consent judgment agree to shift full liability to a third party who did not participate in the agreement, such conduct amounts to collusion and the consent judgment is liable to be set aside. An agreement with the effect of making a third party liable for sums that have not been proved before the court and were arbitrarily reached by the parties is in bad faith and intended to defraud the third party.
Civil Procedure — Lis Pendens — Elements — Pending Proceedings
For the plea of lis pendens to succeed, the party relying on it must show that the matter in issue is directly and substantially in issue in a previously instituted suit or proceeding that is pending between the same parties or parties under whom they claim. Where the allegedly pending proceedings have been disposed of, the lis pendens rule cannot apply.
Contract Law — Consent Judgments — Nature — New Contract
A consent judgment is passed on the terms of a new contract between the parties. As such, a defect in the original agreement or dealings between the parties that led to the filing of the suit will not vitiate a consent judgment that is properly entered upon the agreement of the parties. The vitiating factor alleged must relate to the execution of the consent itself.

Legislation cited (13)

Cases cited (24)

  • Hirani v Kassam [1952] EA 131
  • Attorney General & Uganda Land Commission v James Mark Kamoga & James Kamala (Supreme Court Civil Appeal No. 8 of 2004)
  • Real Market Property Owner v Kampala City Authority (Civil Suit No. 248 of 2008)
  • Sabric Building & Decorating Contractors Ltd v Attorney General (Court of Appeal No. 21 of 2015)
  • Abdulrahman Elamin v Dhabi Group & 2 Others (Court of Appeal Civil Appeal No. 215 of 2013)
  • Makula International Ltd v Cardinal Nsubuga & Another [1982] HCB 15
  • Koboko District Local Government v Okujju Swali (Miscellaneous Application No. 1 of 2016)
  • Democratic Party v Ssenkubuge Rajab & 12 Others (Miscellaneous Application No. 167 of 2020)
  • Kyabazinga of Busoga v Ligwero Richard & 9 Others (Miscellaneous Application No. 215 of 2013)
  • Francis Paul v Namwandu Muteranwa (Court of Appeal Civil Appeal No. 20 of 2014)
  • MHK Engineering Services (U) Ltd v Macdowell Limited (Miscellaneous Application No. 825 of 2018)
  • Betuco (U) Ltd & Another v Barclays Bank & Others (High Court Miscellaneous Application No. 243 of 2009)
  • Kahumba v National Bank of Kenya (Civil Suit No. 1336 of 2001)
  • BM Technical Services v Francis X Rugunda [1999] KALR 821
  • Hirani v Kassam [1952] EA 131
  • Uganda Air Cargo Corporation Ltd v Moses Kirunda & 5 Others (High Court Miscellaneous Application No. 385 of 2013)
  • Leah Associates Ltd v Bunga Hill House Ltd (High Court Miscellaneous Application No. 348 of 2008)
  • Springs International Hotel Ltd v Hotel Diplomate Ltd & Another (Civil Suit No. 227 of 2011)
  • Equity Bank (U) Limited v Buyinza John (High Court Miscellaneous Cause No. 33 of 2018)
  • Brooke Bond Liebig (T) Ltd v Mallya [1975] EA 266
  • Mohamed Allibhai v W.E. Bukenya & Another (Supreme Court Civil Appeal No. 56 of 1996)
  • Hirani v Kassam [1952] EA 131
  • Abdulrahman Elamin v Dhabi Group & 2 Others (Court of Appeal Civil Appeal No. 215 of 2013)
  • Abdulrahman Elamin v Dhabi Group & 2 Others (High Court Civil Suit No. 432 of 2012)

Full judgment

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Krone Uganda Limited v Kerilee Investments Limited (Civil Miscellaneous Application No. 306 of 2019) [2021] UGCommC 16 (21 May 2021)
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.