Wakilii

Nabukenya Sarah and 6 others vs Sulaiman Mukasa and Sons Ltd and others (Miscellaneous Application No. 193 of 2022)

High Court · [2023] UGHCCD 8 · 2023 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Applications for joinder of parties to originating summons proceedings arising from earlier civil suit and settlement dispute
Decision
Applications dismissed; applicants at liberty to address grievances before Registrar of Companies through administrators of estates

Observed later treatment

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Holding

The court held that beneficiaries of deceased shareholders in a company do not have standing to be joined as parties to proceedings concerning recovery of sums owed to the company by a third party. The court ruled that the presence of applicants, who sought joinder on the basis that they were beneficiaries of deceased shareholders holding 80% of the company, was not necessary to determine whether counsel had remitted funds due to the company under a settlement deed. The dispute was a matter of company recovery, not succession or shareholder rights distribution. Applicants were directed to pursue their grievances through the Registrar of Companies via the administrators of the estates.

Outcome

Applications dismissed; applicants at liberty to address grievances before Registrar of Companies through administrators of estates

Facts

Two applications for joinder were brought in relation to Originating Summons No. 02 of 2022, which sought recovery of funds allegedly not remitted by counsel to Sulaiman Mukasa & Sons Ltd under a settlement deed. The first application was brought by seven individuals (Nabukenya Sarah and six others) who claimed to be biological children and beneficiaries of the estates of Haj Mukasa Sulaiman and Hajat Nalubega Rehema, deceased shareholders who owned 80% of the company. They sought to be added as applicants, contending they were fraudulently excluded from negotiating a deed of settlement and that the compensation of UGX 2,700,706,000 affected their entitlements. The second application was brought by Sulaiman Mayanja, who claimed to be a biological son and beneficiary of Haj Mukasa Sulaiman, as well as a director and company secretary of the 1st respondent company. He sought to be added as a defendant. The 1st respondent opposed both applications, arguing that applicants were strangers to the company with no interest in the proceedings, which concerned recovery of company funds wrongfully held by counsel, not distribution of those funds.

Issues

  1. Whether it is necessary and proper to add the applicants as parties to Civil Suit [Originating Summons] No. 02 of 2022?

Orders

  • Both applications dismissed.
  • Costs awarded to the 1st respondent.

Rules and key headnotes

Civil Procedure — Joinder of Parties — Necessary Parties — Test for Joinder
Under Order 1 rule 10(2) of the Civil Procedure Rules, the court may add any person whose presence is necessary to effectually and completely adjudicate upon and settle all questions involved in the suit. For a party to be joined, it must be shown either that the orders sought would legally affect the interest of that person, or that it is desirable to avoid multiplicity of suits, or that the person could not effectually set up a desired defence unless joined.
Civil Procedure — Joinder of Parties — Discretion of Court — Principles
The power to add or strike off a party to pleadings, whether on application of parties or on the court's own motion, is in the discretion of the court. Like all discretion, it must be exercised judiciously based on sound principles. The court may exercise this power at any stage of proceedings to facilitate effective and complete determination of the suit.
Company Law — Company Actions — Standing — Distinction between Company Rights and Shareholder Rights
Beneficiaries of deceased shareholders do not have standing to be joined as parties to proceedings concerning recovery of sums owed to a company by third parties. Such proceedings concern company rights, not shareholder or beneficiary rights. The fact that beneficiaries may eventually benefit from recovered funds does not give them a direct interest in the recovery proceedings.
Succession & Estates — Shares in Companies — Nature and Transmission
Under section 83 of the Companies Act 2012, shares or other interest of any member in a company are movable property transferable in the manner provided in the articles of the company. Shares owned by a deceased shareholder form part of the deceased estate and are administered by the executor or administrator, who must present documents such as a will and grant of probate to the directors to show that a beneficiary is entitled to the shares.
Civil Procedure — Joinder of Parties — Proper Remedy for Aggrieved Beneficiaries
Where beneficiaries of deceased shareholders have grievances concerning the administration of company shares or the conduct of company affairs, they should address those grievances before the Registrar of Companies through the administrators of the estates, not by seeking joinder to proceedings concerning the company's claims against third parties.

Legislation cited (6)

Cases cited (6)

  • Kololo Curing Co Ltd v West Mengo Co-op Union Ltd [1981] HCB 60
  • Yahaya Kariisa v Attorney General and Another (Supreme Court Civil Appeal No. 7 of 1994)
  • Samson Sempasa v P.K. Sengendo (High Court Miscellaneous Application No. 577 of 2013)
  • Departed Asians Property Custodian Board v Jaffer Brothers Ltd [1999] 1 EA 55
  • Chief of Army Staff v Lawal (2012) 10 NWLR p 62
  • N.U.R.T.W v R.T.E.A.N (2012) 10 NWLR (pt 1307) p. 170

Full judgment

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

Nabukenya Sarah and 6 others vs Sulaiman Mukasa and Sons Ltd and others (Miscellaneous Application No. 193 of 2022) [2023] UGHCCD 8 (31 January 2023)
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.