Mujibhai Madhvani & Co. Ltd. & Anor. v. Francis Mugarura & 35 Ors. [2010] UGSC 21

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.

Holding

The Supreme Court dismissed a second appeal arising from an award of terminal benefits to retrenched employees of an expropriated company. It held that section 2(2)(a) of the Expropriated Properties Act nullifies only dealings in the expropriated property or business itself, not employees' employment contracts; applying the ejusdem generis rule, "liabilities of whatever description" in section 1(g) means liabilities in the nature of property such as mortgages, liens and debentures, not employment contracts. Having repossessed the company and made representations and part-payments, the appellants were estopped under section 114 of the Evidence Act from disclaiming liability. The 1991 terms and conditions of service were binding and not unconscionable. The appeal was dismissed with costs.

Outcome

Appeal dismissed; the High Court award of terminal benefits with interest, as affirmed by the Court of Appeal, was upheld.

Facts

The two appellant companies, founded and funded by the Madhvani family, included the Steel Corporation of East Africa (EASCO), which was expropriated in 1972 during the Idi Amin regime. While the company was vested in the Government and managed by the Ministry of Finance under the Expropriated Properties Act, employees were retained and recruited, and in 1991 the Board of Directors adopted improved terms and conditions of service, with a new salary structure effective 1 August 1991. In 1994 the first appellant, the majority shareholder and former owner, repossessed the second appellant. The appellants then retrenched the employees and paid terminal benefits, but not in accordance with the 1991 terms. The respondents, senior staff, sued for the balance of Shs.482,463,910. Documentary evidence (exhibits P1, P5-P10) showed the appellants acknowledged the benefits owed and represented they would pay. The High Court awarded the balance with interest, and the Court of Appeal affirmed.

Issues

1. Whether section 2(2)(a) of the Expropriated Properties Act nullified only dealings in property and business and not employees' employment contracts.
2. Whether employment contracts entered into after 1972 amounted to dealings in the property or business of the second appellant and were nullified under section 2(2)(a).
3. Whether the first appellant, having repossessed the second appellant and paid some terminal benefits, was estopped from disclaiming liability for the respondents' terminal benefits under the 1991 terms and conditions of service.
4. Whether the 1991 terms and conditions of service applied in ascertaining the respondents' terminal benefits and whether those terms were unfair and unconscionable.

Orders

• Appeal dismissed.
• Costs of the appeal awarded to the respondents in the Supreme Court and in the two courts below.

Rules and key headnotes

Legislation cited (8)

• Expropriated Properties Act 1982 s.2(2)(a)
• Expropriated Properties Act 1982 s.2(1)
• Expropriated Properties Act 1982 s.1(g)
• Evidence Act s.114
• Registration of Titles Act
• Companies Act
• Assets of the Departed Asians Decree 1973
• Properties and Businesses (Acquisition) Decree 1973

Cases cited (5)

• Registered Trustees of Kampala Institute v Departed Asians Property Custodian Board (Civil Appeal No. 21 of 1993)
• Greasley v Cooke [1980] 3 All ER 710
• Multiservice Bookbinding Ltd and others v Marden [1978] 2 All ER 489
• Trollope and Colls Ltd v Atomic Power Construction Ltd [1962] 3 All ER 1035
• Interfreit Forwarders (U) Ltd v EADB (Civil Appeal No. 33 of 1992)

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