Wakilii

Specioza Kalungi & 61 Ors v Attorney General & Anor (HCCS 63 of 2008)

High Court · [2011] UGCOMMC 37 · 2011 Suit Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil suit by proven creditors of liquidated public enterprise seeking payment from divestiture account
Decision
Suit dismissed. Plaintiffs' claims against both defendants failed on preliminary objections and merits.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed the plaintiffs' claim seeking payment from the divestiture account for debts owed by Uganda Transport Company (1975) Ltd. The court held that no cause of action existed because the liquidation yielded no proceeds deposited into the divestiture account. Under binding Supreme Court precedent, creditors can only be paid from the divestiture account if proceeds from the divested enterprise were deposited there. The Minister's discretion to approve ex gratia payments is not judicially reviewable absent evidence of arbitrariness, discrimination, or violation of natural justice. DRIC lacks corporate status and cannot be sued.

Outcome

Suit dismissed. Plaintiffs' claims against both defendants failed on preliminary objections and merits.

Facts

The plaintiffs were proven creditors of Uganda Transport Company (1975) Ltd whose claims were established during liquidation in 1999. The liquidation yielded UGX 45,190,529, used entirely to pay liquidation expenses, leaving no funds for creditors and no money deposited in the divestiture account. Plaintiffs sought payment from the divestiture account under the Public Enterprise Reform and Divestiture Act, arguing the defendants had a statutory duty to pay from that account or seek budgetary allocation. Correspondence from 1997 to 2005 shows the Attorney General advised payment but the Privatization Unit and DRIC rejected payment from the divestiture account. In 2005, DRIC approved ex gratia payment of 20% of claims to some creditors as full and final settlement. Plaintiffs filed suit in 2008 seeking declarations compelling payment, aggravated damages, and interest.

Issues

  1. Whether the plaintiffs' suit discloses a cause of action against the defendants.
  2. Whether the suit is time-barred under the Civil Procedure and Limitation (Miscellaneous Provisions) Act.
  3. Whether the suit was properly instituted before the Commercial Court.
  4. Whether the Divestiture Reform and Implementation Committee (DRIC) has corporate status to be sued.
  5. Whether the plaintiffs can claim payment from the divestiture account where no proceeds from liquidation were deposited into that account.
  6. Whether the plaintiffs are entitled to payment from budgetary allocation or divestiture account.

Orders

  • Suit dismissed.
  • No order as to costs.

Rules and key headnotes

Cause of Action — Plaint Discloses No Cause of Action — Test
In deciding whether a suit discloses a cause of action, the court looks ordinarily only at the plaint and assumes that the facts alleged in it are true. The determination requires an examination of the plaint and any documents attached to it. All facts necessary to disclose a cause of action must be alleged in the plaint.
Government Departments — Corporate Status — Cannot Be Implied
Unless Parliament has deemed it fit to specifically confer corporate status on a government department, such status cannot be implied by the court. A department without express corporate status is merely a department of government and cannot sue or be sued. A suit cannot be maintained against a non-entity.
Limitation — PERD Act Prevails Over Limitation Act
Where any provision of any enactment conflicts with any provision of the Public Enterprise Reform and Divestiture Act, the PERD Act shall prevail over the other enactment. Time cannot run for purposes of limitation where the divestiture process has not been completed and ongoing dialogue and fresh claims continue to be made.
Limited Liability Company — Government Not Liable for Debts of Wholly-Owned Company
An incorporated company with limited liability has capacity to sue and be sued and is an independent legal personality separate from the Uganda Government, even where the Government is its sole shareholder. As a result the Government is not and cannot be liable for the company's debts.
PERD Act — Payment from Divestiture Account — Requirements for Cause of Action
For a plaint to disclose a cause of action on the basis of section 23 of the PERD statute, it must aver that the debtor public enterprise has been sold and the proceeds of the sale are on the divestiture account. The money to be paid must be from the proceeds of the sale of the debtor public enterprise. To pay or not to pay is in the discretion of government through its agents. If no proceeds were deposited into the divestiture account, no cause of action arises.
Ex Gratia Payments — No Legal Right — Discretionary
An ex gratia payment is a payment without consideration of legal merits, assuming the person settling is not legally liable. It relies on the favour of the grantor and cannot form the basis of a suit because it is based on discretion and compassion, not legal right. A court cannot compel anybody to favour another. Ex gratia is not a legal right but merely a consideration on compassionate grounds.
PERD Act — Ministerial Discretion — Use of Divestiture Account Proceeds
The Minister responsible for finance has discretionary power on how to utilize money in the divestiture account under section 26 of the PERD Act. In the absence of an application for judicial review and evidence that the Minister acted contrary to principles of natural justice, equity, good conscience, or that discretion was exercised arbitrarily, selectively, or discriminatorily, the Minister's exercise of discretion is not judicially reviewable. The Minister is accountable to Parliament.

Legislation cited (13)

  • Public Enterprise Reform and Divestiture Act s.2
  • Public Enterprise Reform and Divestiture Act s.21
  • Public Enterprise Reform and Divestiture Act s.23
  • Public Enterprise Reform and Divestiture Act s.26
  • Public Enterprise Reform and Divestiture Act s.34
  • Public Enterprise Reform and Divestiture Act s.40
  • Public Enterprise Reform and Divestiture Act s.41
  • Public Enterprise Reform and Divestiture (Amendment) Statute 2000 s.21
  • Civil Procedure and Limitation (Miscellaneous Provisions) Act s.3
  • Civil Procedure Rules O.7 r.11
  • Civil Procedure Rules O.15 r.2
  • Companies Act s.288
  • Government Proceedings Act

Cases cited (10)

  • Attorney General v Oluoch (1972) EA 392
  • Sullivan v Ali Mohamed Osman (1959) EA 239
  • Jeroj Shariff & Co v Chotai Family Stores (1960) EA 374
  • Auto Garage v Motokov (1971) EA 514
  • Gordon Sentiba & 2 Others v Inspector General of Government (SCCA 6 of 2008)
  • Priamit Enterprises Ltd v Attorney General (SCCA 10 of 2001)
  • UNIDRON & 25 Others v Attorney General (HCCS 4 of 2007)
  • Mugenyi & Company Advocates v Attorney General (Civil Appeal 43 of 1995)
  • UNIDRON Ltd & 26 Others v Minister of Finance & DRIC (MA 401 of 2008)
  • Geoffrey Baguma & 35 Others v The Executive Director PERD (Miscellaneous Application 759 of 1999)

Full judgment

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

Specioza Kalungi & 61 Ors v Attorney General & Anor (HCCS 63 of 2008) [2011] UGCommC 37 (26 May 2011)
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.