Wakilii

Simba Properties Investment Company Limited and Another v Kirunda and 3 Others (Miscellaneous Application No. 671 of 2022)

High Court · [2022] UGCOMMC 37 · 2022 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for temporary injunction arising from Civil Suit No. 424 of 2022, seeking to restrain respondents from selling applicants' mortgaged properties
Decision
Application dismissed and underlying suit struck out

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court dismissed the application for temporary injunction and struck out the underlying suit. The matters raised in the suit were subject to a valid, binding and operative arbitration agreement, and arbitral proceedings were already underway. The court had previously referred the dispute to arbitration and lacked jurisdiction to entertain the suit. The applicants' reliance on a declaratory ruling that the mortgagee lacked capacity to sue was misconceived—that ruling addressed only locus standi for judicial review proceedings, not the mortgagee's existence or the validity of the arbitration clause. The respondents acted as agents of a disclosed principal and could not be sued personally. No prima facie case was established.

Outcome

Application dismissed and underlying suit struck out

Facts

The applicants borrowed money from Vantage Mezzanine Fund II Partnership under a Mezzanine Term Facility Agreement dated 11 December 2014, secured by mortgages over properties in Kampala. Following default, the respondents, acting as advocates and a bailiff for the mortgagee, advertised the mortgaged properties for sale by public auction on 18 May 2022 to recover over US$32 million. The applicants had previously filed Civil Suit No. 988 of 2019, which was dismissed on 16 June 2021 when the court referred the parties to arbitration pursuant to a valid arbitration clause in the facility agreement. Vantage Mezzanine Fund II Partnership subsequently commenced arbitral proceedings at the International Chamber of Commerce in London. The applicants also relied on a ruling in High Court Miscellaneous Cause No. 205 of 2022, which found that Vantage Mezzanine Fund II Partnership lacked locus standi to bring judicial review proceedings in Uganda for failure to register under the Partnership Act. Based on that ruling, the applicants filed Civil Suit No. 424 of 2022 challenging the validity of the mortgage and the advertisement for sale, and sought a temporary injunction restraining the respondents from selling the properties.

Issues

  1. Whether the applicants have shown a prima facie case with a probability of success.
  2. Whether the applicants stand to suffer irreparable injury if the temporary injunction is not granted.
  3. Whether the balance of convenience favours the grant of a temporary injunction.
  4. Whether the court has jurisdiction to grant the injunction in light of a valid arbitration agreement between the parties.
  5. Whether the underlying suit challenging the validity of the mortgage and the advertisement for sale constitutes an abuse of process.
  6. Whether advocates acting as agents of a disclosed principal can be sued in their personal capacities for actions taken in their professional capacity.

Orders

  • Application for temporary injunction dismissed with costs to the respondents.
  • Civil Suit No. 424 of 2022 struck out with costs to the defendants.

Rules and key headnotes

Arbitration — Jurisdiction — Effect of Valid Arbitration Clause — Court's Duty to Refer Disputes to Arbitration
Where parties have executed a valid, binding and operative arbitration agreement capable of being performed, and the dispute falls within the scope of matters agreed to be arbitrated, the court must refer the parties to arbitration and decline to exercise jurisdiction over the dispute.
Arbitration — Non-Intervention by Courts — Scope of Section 9 of the Arbitration and Conciliation Act
Except as provided in the Arbitration and Conciliation Act, courts should not intervene in matters submitted to arbitration. The right of parties to resolve their dispute by arbitration must be upheld and given effect by courts.
Contract — Partnership — Carrying On Business in Uganda — Registration Requirements Under Partnership Act
Registration under the Partnership Act is mandatory only for firms 'carrying on business in Uganda,' which requires actual presence in Uganda (such as maintaining physical premises) and sustained business activity for a period of time. A virtual presence or single transaction does not constitute carrying on business. Foreign partnerships digitally conducting business remotely without physical presence in Uganda are not required to register.
Civil Procedure — Interlocutory Injunctions — Prerequisites — Prima Facie Case
For a temporary injunction to be granted, the applicant must establish a prima facie case with a probability of success, show that irreparable injury would be suffered which cannot be adequately compensated by damages, and demonstrate that the balance of convenience favours the grant. Where the underlying suit is misconceived because the matters in issue are subject to arbitration, no prima facie case is established.
Civil Procedure — Agency — Suing Agents of Disclosed Principals — Liability of Agents
A person who acts as an agent for a disclosed principal in a transaction is not personally liable to third parties in respect of that transaction. At common law, only the principal can sue and be sued. A suit against agents acting for a disclosed principal is misconceived.
Civil Procedure — Independence of the Legal Profession — Identifying Lawyers with Clients or Causes
Advocates should not be identified with their clients or their clients' causes as a result of discharging their professional functions. Suing advocates for actions taken in the course of representing a client constitutes intimidation and harassment, and is an affront to the right to legal representation and the independence of the legal profession.
Statutory Interpretation — Obiter Dicta — Binding Effect — Ratio Decidendi Distinguished
Only the ratio decidendi of a judicial decision is binding on other courts. Obiter dicta—comments, suggestions or observations made by a judge that are not necessary for resolving the matter in issue—are not legally binding in later cases. A court is not bound by statements in a previous judgment that were not essential to the decision.

Legislation cited (10)

Cases cited (19)

  • E.A. Industries v Trufoods [1972] EA 420
  • Fellowes and Son v Fisher [1976] 1 QB 122
  • American Cyanamid Co v Ethicon Limited [1975] AC 396
  • Geilla v Cassman Brown Co Ltd [1973] EA 358
  • GAPCO Uganda Limited v Kaweesa and Another (Miscellaneous Application No. 259 of 2013)
  • Godfrey Sekitoleko and Four Others v Seezi Peter Mutabazi and Two Others [2001-2005] HCB 80
  • Nsubuga and Another v Mutawe [1974] EA 487
  • In the Matter of C Kasozi Ddamba [1980] HCB 115
  • M/S Muwayire Nakana & Co Advocates v Departed Asians Property Custodian Board and Another [1987] HCB 91
  • Gladys Nyangire Karumu v Mohammed Kalisa (Miscellaneous Application No. 731 of 2015)
  • Humphrey Nzeyi v Bank of Uganda and Another (Constitutional Application No. 1 of 2013)
  • One Solutions Ltd v Eastern and Southern African Management Institute (Miscellaneous Cause No. 33 of 2015)
  • Dry Goods Co. v. Lester, 60 Ark. 120, 29 S. W. 34, 27 L. It. A. 505, 40 Am. St. Rep. 102
  • Marson v Morton [1986] 1 WLR 1343
  • HMB Holdings Ltd v Antigua and Barbuda 2021 SCC 44
  • Adams v Cape Industries Plc [1990] 1 Ch 433
  • Morelle v Wakeling [1955] 2 QB 379
  • Friendship Container Manufacturers Ltd v Mitchell Cotts (K) Ltd [2001] 2 EA 338
  • Pheneas Agaba v Swift Freight (Civil Suit No. 1000 of 1999)

Full judgment

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

Simba Properties Investment Company Limited and Another v Kirunda and 3 Others (Miscellaneous Application No. 671 of 2022) [2022] UGCommC 37 (15 June 2022)
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.