Wakilii

Mpeirwe v Alsaco International Ltd & 2 Ors (HCCS 440 of 2014)

High Court · [2016] UGCOMMC 223 · 2016 Judgment for Plaintiff (Partial) AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit in Commercial Division for breach of contract, wrongful termination, defamation and interference with business
Decision
Suit dismissed against 2nd and 3rd defendants. Judgment entered for plaintiff against 1st defendant for breach of implied trust and wrongful termination with awards of refund of expenditure, salary arrears, notice pay, and general damages.

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

Held that the plaintiff proved breach of implied trust by the first defendant in failing to refund monies expended by the plaintiff on company operations. The claims for transfer of shares, defamation, and wrongful inducement failed as the plaint disclosed no cause of action against the second and third defendants individually. The plaintiff succeeded on breach of trust and wrongful termination claims against the first defendant only. Awards granted for refund of expenditure, salary arrears, notice pay, and general damages.

Outcome

Suit dismissed against 2nd and 3rd defendants. Judgment entered for plaintiff against 1st defendant for breach of implied trust and wrongful termination with awards of refund of expenditure, salary arrears, notice pay, and general damages.

Facts

The plaintiff was employed as general manager of the first defendant company from 26 April 2013. The first defendant provided security guards for US installations in Iraq under a contract the plaintiff helped secure. The plaintiff alleged a verbal agreement with the second defendant (the company director) to receive 30% shares and business proceeds. Between September 2013 and March 2014, while the second defendant was deported from Uganda and later detained in India, the plaintiff managed company operations and expended his personal funds totalling approximately Uganda shillings 90,000,000 on company expenses upon the second defendant's request, with understanding that refund would be made. When the second defendant returned in March 2014, the plaintiff demanded refund. Instead, the first defendant published an advertisement in the Daily Monitor on 8 April 2014 stating the plaintiff was no longer an employee. The plaintiff sued for breach of contract, wrongful termination, defamation, and refund of expenditure.

Issues

  1. Whether the defendants are liable to the plaintiff for breach of trust
  2. Whether the 2nd defendant defamed the character of the plaintiff
  3. Whether the 1st defendant had a contract with the plaintiff for the transfer of shares and if so whether it was breached
  4. Whether the 2nd defendant wrongly induced a breach of contract with the plaintiff
  5. Whether the 2nd defendant wrongly terminated the plaintiff's employment with the 1st defendant

Orders

  • The plaintiff is awarded Uganda shillings 89,561,400/= being money expended by the plaintiff from his personal resources for the first defendant's business.
  • The plaintiff is awarded US$ 1,950 as arrears of salary at the rate of US$ 650 per month for January, February and March 2014.
  • The plaintiff is awarded US$ 650 in lieu of notice.
  • The plaintiff is awarded general damages of US$ 50,000 for expectation to earn from the business deal.
  • Awards in Uganda shillings carry interest at 19% per annum from the date the suit was filed till payment in full.
  • Awards in US$ on salary arrears and notice pay carry interest at 10% per annum from the date of filing the suit till date of judgment.
  • Awards in Uganda shillings carry interest at 19% per annum from the date of judgment till payment in full.
  • Awards in US$ on the aggregate sum at the date of judgment carry interest at 10% per annum from the date of judgment till payment in full.
  • The plaintiff is awarded costs of the suit.
  • The suits against the second and third defendants are dismissed.
  • Each party to bear own costs of the dismissal against the 2nd and 3rd defendants.
  • The prayer for specific performance granting the plaintiff 30% shares in the first defendant company is disallowed.
  • The claim for defamation is disallowed.
  • The claim for exemplary damages is disallowed.

Rules and key headnotes

Civil Procedure — Preliminary Objections — No Cause of Action — Test for Plaint Disclosing Cause of Action
For a plaint to disclose a cause of action, it must allege that the plaintiff enjoyed a right, that right has been violated, and the defendant is liable. The court assumes the facts alleged in the plaint are true and determines whether a cause of action is disclosed by perusing the plaint together with attachments forming part of it, but makes no reference to the defence.
Company Law — Directors — Liability — Suing Directors Personally for Company Acts
In so far as a director of a company is an agent of the company and the company was the ostensible and active principal, the principal should be sued and not the agent. To justify suing a director personally as an exception to this general rule, the circumstances permitting such action must be detailed in the plaint, as a director's duty lies to the company and not to third parties.
Contract Law — Statutory Requirements — Contracts Exceeding 25 Currency Points Must Be in Writing
Under section 10(5) of the Contracts Act, a contract the subject matter of which exceeds twenty-five currency points must be in writing. A currency point is Uganda shillings 20,000, therefore 25 currency points equals Uganda shillings 500,000. A contract that does not comply with this mandatory requirement cannot be proved in evidence, though it is not illegal.
Company Law — Shares — Transfer and Transmission — Private Companies — Directors' Discretion
In a private limited liability company, transmission of shares is subject to restrictions in the articles of association and the discretionary powers of the directors. Articles of association may confer discretion on directors with regard to acceptance of transfers of shares, and that discretion must be exercised bona fide in the interests of the company. A minority shareholder director cannot determine the matter of share transfer unilaterally.
Tort Law — Defamation — Publication — Test of Reasonable Man
For words to amount to defamation there must have been publication to a third party. In determining whether an article is defamatory, it must be considered as a whole through the lens of a reasonable man who is not unusually suspicious and is fair-minded. It is not sufficient to pick out a phrase here and a sentence there to conclude that the article is defamatory.
Contract Law — Trusts — Implied Trusts — Resulting Trust for Monies Expended
An implied trust arises from the facts and circumstances of a case. Where a person pays his own monies on behalf of another's business with understanding that refund will be made, the recipient becomes liable as a trustee under an implied or resulting trust to refund monies used on its behalf to enhance or carry out its business. Failure to refund constitutes breach of the implied trust.
Employment & Labour — Termination — Notice — Reasonable Notice Period
Under section 58(3)(b) of the Employment Act 2006, an employee is entitled to a notice period of not less than one month where there is no written contract of employment specifying the notice period. A contract of employment shall not be terminated without notice except in case of summary dismissal.

Legislation cited (20)

Cases cited (16)

  • Tororo Cement Co Ltd v Frokina International Ltd (SCCA No. 2 of 2001)
  • Theresa Okoth Ofumbi & Another v Nagi Hamadali Ahmed Karim (SCCA No. 24B/92)
  • Merkur Island Shipping Corp. versus Laughton (1983) 2 AC 570, 609-610
  • Allen vs. Flood (1898) AC 1
  • Katojabha Jiwa vs. Zenab (1957) EA
  • Adoko Nekyon vs. Tanganyika Standard Limited
  • Odongkara vs. Astles (1970) EA 377
  • Auto Garage vs. Motokov (1971) EA 514
  • Major General David Tinyefunza v Attorney General of Uganda (Constitutional Appeal No. 1 of 1997)
  • Attorney General vs. Oluoch (1972) 1 EA 392
  • D C Thomson & Co Ltd v Deakin [1952] 2 All ER 361 at pages 379 - 380
  • Sullivan v Alimohamed Osman [1959] 1 EA 239
  • Merkur Island Shipping Corp v Laughton and others [1983] 2 All ER 189
  • Re Smith & Fawcett Ltd [1942] 1 All ER 542
  • Greenhalgh v Mallard and Others [1943] 2 All ER 234
  • Rooks vs. Barnard [1964] A.C. 1129

Full judgment

↓ Download PDF

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

Mpeirwe v Alsaco International Ltd & 2 Ors (HCCS 440 of 2014) [2016] UGCommC 223 (22 December 2016)
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.