Wakilii

Orient Bank Limited v Yudaya Musisi (Labour Dispute Miscellaneous Application 197 of 2021)

Industrial Court · [2023] UGIC 38 · 2023 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside Registrar's ruling permitting execution of decree arising from Labour Dispute Reference No. 121 of 2017
Decision
Application dismissed; Registrar's execution ruling confirmed; execution to issue for outstanding decree amount with interest

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Industrial Court dismissed the application to set aside the Registrar's execution ruling. The court held that the Applicant was estopped from recovering tax it had undertaken to pay, having represented in writing that it had incurred the tax liability. The Applicant was not entitled to set off a loan amount from the decretal sum where no counterclaim had been pleaded in the main proceedings and the loan liability was subject to separate pending litigation. The Applicant was liable for foreign exchange losses arising from paying the judgment debt into a USD account instead of the UGX account specified by the Respondent.

Outcome

Application dismissed; Registrar's execution ruling confirmed; execution to issue for outstanding decree amount with interest

Facts

The Respondent obtained a judgment in her favour in Labour Dispute Reference No. 121 of 2017 on 29 November 2019 and extracted a decree on 20 December 2019. In August 2020, the Applicant paid the decretal amount but offset UGX 41,889,329 as a purported loan recovery and paid UGX 36,676,631 to Uganda Revenue Authority as tax. The Applicant also paid the funds into a USD bank account instead of the UGX account specified by the Respondent's lawyers, causing a foreign exchange loss. The Respondent filed for execution in Miscellaneous Application No. 115 of 2020. On 7 December 2021, the Registrar ruled in favour of the Respondent, permitting execution for UGX 60,221,591. The Applicant then brought this application to set aside the Registrar's ruling, arguing it was entitled to recover the tax paid, set off the loan amount, and was not liable for the forex loss.

Issues

  1. Whether the Applicant is entitled to recover money paid to Uganda Revenue Authority?
  2. Whether the Applicant is entitled to set off UGX 41,889,329 from the decretal amount as purported loan recovery?
  3. Whether the Applicant is liable for the foreign exchange loss it caused by paying money into the wrong account?

Orders

  • The Applicant is estopped from reneging on its written undertaking to incur tax arising under the decree.
  • The Applicant is not entitled to offset UGX 41,889,329 as loan recovery; it should be paid back to the Respondent.
  • The Applicant is liable to make good the loss occasioned by paying money into the wrong account with interest at 10% per annum from 6 August 2020 until payment in full.
  • The Applicant is obligated to pay the Respondent the outstanding principal and interest thereon at 10% per annum from 6 August 2020 until payment in full.
  • Execution should issue to enforce the payment of the outstanding decree.
  • The Applicant's affidavit in rejoinder is struck out for being incurably defective and argumentative.

Rules and key headnotes

Affidavits — Defective Affidavits — Argumentative Matter
An affidavit drafted in the form of a plaint and containing argumentative matter throughout is incurably defective in its entirety and must be struck out where it is impossible to sever offending paragraphs from those that could be saved.
Estoppel — Statutory Obligations — Undertaking to Pay Tax
Where an employer undertakes in writing to incur the tax liability arising from a judgment debt and actually pays that tax to the Uganda Revenue Authority, the employer is estopped from subsequently seeking to recover that amount from the employee, notwithstanding the statutory obligation under the Income Tax Act for employees to pay tax on employment income.
Employment Income — Damages and Severance — Taxability
General damages and severance allowance awarded by a court as remedies for wrongful and unlawful termination of employment are penalties against the employer and not compensation within the meaning of section 19(1)(d) of the Income Tax Act, and therefore do not constitute taxable employment income.
Set-Off and Counterclaim — Requirements for Pleading
A defendant seeking to set off a claim against a plaintiff's judgment debt must plead the set-off or counterclaim in the defence in the main proceedings in accordance with Order 8 Rule 2 of the Civil Procedure Rules, including the specific amount claimed, distinct facts giving rise to the set-off, and supporting evidence. Where no such pleading was made and no evidence adduced in the main proceedings, the defendant cannot raise the set-off for the first time at the execution stage.
Execution — Scope of Execution Court's Jurisdiction
An execution court can only determine reliefs strictly granted and arising from the decree being executed. It cannot adjudicate on matters that were not pleaded or determined in the main proceedings, nor can it consider peripheral matters that are the subject of separate pending litigation.
Foreign Exchange Loss — Liability for Payment into Wrong Account
Where a judgment debtor pays a judgment debt into a foreign currency account instead of the local currency account specified by the judgment creditor, the judgment debtor is liable for any loss occasioned by the foreign currency conversion, including the application of exchange rates and charges incidental to the conversion.

Legislation cited (16)

Cases cited (5)

  • Male Mabirizi v Attorney General (Supreme Court Miscellaneous Application No. 7 of 2018)
  • Kizza Besigye v Museveni & Anor (Election Petition No. 1 of 2001) [2001] UGSC 4
  • Uganda Revenue Authority v Siraje Hassan Kajara (Civil Appeal No. 9 of 2015)
  • Maritime Electric Company Limited vs General Dairies 1937 AC
  • Centenary Rural Development Bank v Richard Ivan Uhangi trading as Survessis (Civil Suit No. 116 of 2018)

Full judgment

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

Orient_Bank_Limited_v_Yudaya_Musisi_(Labour_Dispute_Miscellaneous_Application_197_of_2021)_[2023]_UGIC_38_(9_May_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.