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Shmuel Hirshberg Muli v Aharon Li-Ran & 3 Ors (Miscellaneous Application No. 832 of 2015)

High Court · [2017] UGCOMMC 140 · 2017 Application Granted — Contempt Found AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for declaration of contempt of court arising from breach of restraining order in ongoing commercial suit concerning shareholding in Audley Limited
Decision
Respondent found in contempt; purported share transfer and Power of Attorney disregarded pending main suit determination

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court found the respondent in contempt of the 19 October 2015 restraining order by causing or permitting the transfer of 60% shareholding in Audley Limited to Queen-Foreign Affairs Limited and the issuance of a Power of Attorney appointing Yigal Zilkha to operate Kampala Casino and Pyramid Casino. The purported share transfer and Power of Attorney were disregarded pending determination of the main suit. The respondent was ordered to pay costs but no fine was imposed.

Outcome

Respondent found in contempt; purported share transfer and Power of Attorney disregarded pending main suit determination

Facts

Audley Limited is a foreign company incorporated in the Isle of Man and registered in Uganda. By November 2012, Shmuel Peled and the respondent executed a Declaration of Trust confirming they held 60% of Audley Limited's shares in trust for the applicant's benefit, with the remaining 40% divided among the respondent (13.3%), Shmuel Peled (13.3%), and Bob Kabonero (13.3%). The shares were held by nominee shareholders Tanwood Limited and Garwood Limited. On 27 March 2015, Shmuel Peled transferred 3,666 shares to the respondent via Garwood Limited. The applicant instituted proceedings and obtained a restraining order on 19 October 2015 preventing the respondent from transferring the 60% shareholding and from interfering with casino operations. In May 2016, 6,000 shares were transferred from Garwood Limited to Queen-Foreign Affairs Limited. In February 2016, a Power of Attorney was issued appointing Yigal Zilkha to manage the casino operations. Annual returns from 2008-2015 showed only Tanwood and Garwood as shareholders; Queen-Foreign Affairs appeared only after the restraining order.

Issues

  1. Whether the transfer of 6,000 shares (60% of Audley Limited shareholding) from Garwood Limited to Queen-Foreign Affairs Limited occurred subsequent to the 19 October 2015 restraining order and was caused or permitted by the respondent.
  2. Whether the issuance by Audley Limited of a Power of Attorney dated 3 February 2016 appointing Yigal Zilkha with powers to carry on the operations of Kampala Casino and Pyramid Casino was caused or permitted by the respondent and constituted contempt of the restraining order.
  3. Whether the respondent was in contempt of the restraining order and what remedies should follow.

Orders

  • Declaration that the respondent is in contempt of the restraining order dated 19 October 2015 for transferring 60% shareholding in Audley Limited.
  • Declaration that the respondent is in contempt of the same restraining order for interfering with the operations of Kampala Casino and Pyramids Casino through the Power of Attorney.
  • The purported transfer of shares to Queen-Foreign Affairs Limited is disregarded until determination of H.C.C.S No. 651 of 2015.
  • The purported Power of Attorney dated 3 February 2016 shall have no effect until determination of H.C.C.S No. 651 of 2015.
  • Application to impose a fine of UGX 100,000,000 declined.
  • Respondent to pay the applicant costs of the application.

Rules and key headnotes

Contempt of Court — Elements — Proof Requirements
To establish contempt of court, three conditions must be satisfied: existence of a lawful order, the potential contemnor's knowledge of the order, and the potential contemnor's failure to comply with the order.
Contempt of Court — Duty to Obey Court Orders — Irregular or Void Orders
A party who knows of a court order, whether null, regular, or irregular, is not permitted to disobey it and should not be the judge to determine whether the order is null or irregular, but should instead apply to court to have it discharged. This obligation extends even to cases where the person believes the order is irregular or void.
Foreign Companies — Service of Court Orders — Registration in Uganda
Where a foreign company is duly registered in Uganda under Part VI of the Companies Act 2012 and represented by counsel in proceedings, it is not necessary to serve court orders on the company and its directors in the foreign jurisdiction where the company was incorporated.
Contempt of Court — Remedies — Disregarding Transactions Made in Contempt
Where a court finds contempt consisting of transactions effected in breach of a restraining order, the court may exercise its discretion to disregard those transactions pending the determination of the main suit, thereby preserving the status quo the restraining order was intended to protect.

Legislation cited (4)

Cases cited (4)

  • Stanbic Bank (U) Ltd & Jacobsen Power Plant Ltd v Uganda Revenue Authority (Miscellaneous Application No. 42 of 2010)
  • Hon. Sitenda Sebalu v Secretary General of the East African Community (Reference No. 8 of 2012)
  • Hadkinson v Hadkinson [1952] All ER 567
  • L.C.Chuck and Cremier [1896] E R 885

Full judgment

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Shmuel Hirshberg Muli v Aharon Li-Ran & 3 Ors (Miscellaneous Application No. 832 of 2015) [2017] UGCommC 140 (30 June 2017)
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.