Wakilii

Taremwa & 2 Others v Goetz & 2 Others (Civil Suit 548 of 2018; Civil Suit 766 of 2016)

High Court · [2023] UGCOMMC 266 · 2023 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Two civil suits consolidated — breach of joint venture agreement, claims for share allotment and profit distribution
Decision
Judgment entered for the Plaintiffs with orders for share allotment, forensic audit to determine profits due, payment of damages, and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

Held that the plaint disclosed a cause of action as the 1st Defendant was properly joined and the 2nd Defendant was a third party beneficiary with rights and obligations under the Joint Venture Agreement. The Defendants were found to have breached the JVA by incorporating African Gold Refinery Limited without the Plaintiffs as shareholders contrary to the parties' intentions, failing to allot shares to the Plaintiffs after they fulfilled their obligations, and failing to distribute profits. Share allotment, account of profits, and damages for breach of contract ordered.

Outcome

Judgment entered for the Plaintiffs with orders for share allotment, forensic audit to determine profits due, payment of damages, and costs

Facts

In 2014, the 1st Defendant approached the 1st and 3rd Plaintiffs seeking assistance to obtain land and government approvals for a gold refinery business venture. The parties entered into a Joint Venture Agreement on 12 December 2014 with the 3rd Defendant, envisaging the 2nd Defendant (African Gold Refinery Limited) as the joint venture company. The Plaintiffs' share of profits was 5%. The 1st Plaintiff used contacts to source land and assisted in obtaining licences. However, the 1st Defendant had already incorporated the 2nd Defendant on 18 March 2014 with himself as majority shareholder, without the Plaintiffs' knowledge. A Special Resolution was passed in April 2014 providing for share allotment to the Plaintiffs, but the 2nd Defendant's Memorandum and Articles were subsequently amended in 2015 showing the 1st Defendant holding 999 shares and Moses Sadoori holding 1 share, excluding the Plaintiffs entirely. Despite the Plaintiffs fulfilling their obligations, the Defendants failed to allot shares or distribute profits, prompting these suits.

Issues

  1. Whether the Plaint discloses a cause of action against the 1st and 2nd Defendants.
  2. Whether the Defendants are in breach of the terms of the Joint Venture Agreement.
  3. Whether the Plaintiffs are entitled to the allotted shares in the 2nd Defendant pursuant to the JVA.
  4. What are the available remedies to the parties?

Orders

  • The 1st Defendant is in breach of the Joint Venture Agreement to the detriment of the Plaintiffs.
  • The Defendants are ordered to jointly and severally allot shares to the Plaintiffs in accordance with the Joint Venture Agreement and the resultant Special Resolution of April 2014 (PEX 14).
  • An injunctive order is hereby issued restraining the 1st Defendant or anyone acting in his behalf from further carrying on the operations and business of the company (AGR) until the allotment of shares to the Plaintiffs and appointment of Directors and Secretary of the company.
  • An order is hereby issued for the appointment of a Board of Directors and Secretary to administer the Company's affairs.
  • An order for the Defendants to render an account and to account for the profits due to the Plaintiffs pursuant to their respective share of profits is hereby issued. In this regard and in order to give effect to the said order, the Court directs that a reputable independent audit firm recognised by this Court is appointed by the Deputy Registrar to carry out a forensic audit of the 2nd Defendant at the Defendants' cost from the date of its incorporation to date to establish the revenue and profits made by the 2nd Defendant in order to determine the profit payable to the Plaintiffs in proportion under the JVA.
  • A consequential order is hereby issued that the Defendants pay to the Plaintiffs the proportion of profits due and owing to the Plaintiffs from the date of incorporation of the 2nd Defendant or such time when the 2nd Defendant began to make profits.
  • General damages of UGX 300,000,000 to be paid by the Defendants to the Plaintiffs for breach of contract.
  • No order on exemplary damages payable to the 3rd Plaintiff as the issue in respect of the said prayer was abandoned during the scheduling conference.
  • No award of interest at 25% as the same was not agreed on by the parties and neither was it prayed for in the pleadings.
  • Costs of the suit awarded to the Plaintiffs.

Rules and key headnotes

Contract Law — Privity of Contract — Third Party Beneficiaries — Right to Enforce Contractual Terms
A third party to a contract may enforce contractual terms where the contract confers a benefit on that party, and the third party shall have available any remedy that would have been available had that third party been a party to the contract, in accordance with section 65(5) of the Contracts Act 2010.
Company Law — Corporate Veil — Lifting of Corporate Veil — Necessity of Pleading and Proof
A director or shareholder of a company cannot be sued in their personal capacity without lifting the corporate veil; the doctrine of lifting of the corporate veil is a separate procedure that must be pleaded and proved, and requires evidence of fraud or other statutory grounds under section 20 of the Companies Act 2010.
Civil Procedure — Joinder of Parties — Proper Joinder Where Common Questions of Law Arise
Parties may be properly joined where common questions of law would arise if separate suits were brought, and where a party would be affected by the outcome of the suit such that they ought to be heard rather than condemned unheard, in accordance with Order 1 Rule 3 of the Civil Procedure Rules.
Contract Law — Mistake — Common Mistake — Effect Where Both Parties Aware of True Facts
A contract is not void for common mistake where both parties were aware of the true facts at the time of execution, including the existence of a company that the contract purported to establish; the defence of mistake only arises where only one party has knowledge of the subject matter and the other simply relies on what the first party intimates.
Company Law — Shares — Acquisition of Shares — Allotment by Directors
Shares are acquired by subscription at incorporation, by allotment by the directors, by purchase from a shareholder, or by transmission upon death; where a joint venture agreement entitles parties to profit sharing and shareholding but shares are not allotted despite fulfilment of obligations, the directors are in breach and must allot the shares as agreed.
Contract Law — Breach of Contract — Failure to Honour Contractual Obligations
Breach of contract occurs when a party to a contract fails to honour their obligations under the contract; where a party incorporates a joint venture company without including agreed shareholders, fails to allot shares after obligations are fulfilled, and fails to distribute agreed profits, those actions constitute breach of contract.

Legislation cited (11)

Cases cited (10)

  • Auto Garoge & Others v Motokov (1971) EA 514
  • Nakiryowa and Another v Sserugo and Another (Civil Suit No. 587 of 2015)
  • Mathias Ilangi Kaganda v UEB (Civil Suit No. 124 of 2003)
  • Uganda Telecom Ltd v Zte Corporation (Court of Appeal No. 03 of 2017)
  • HL Bolton Co v TJ Graham and Sons [1957] 3 All ER 624
  • Samuel Abbo v Cimeel Engineering Ltd (Miscellaneous Application No. 29 of 2013)
  • Stanbic Bank Uganda Ltd v Ducat Lubricants (U) Ltd and 3 Others (Miscellaneous Application No. 845 of 2013)
  • Asante Aviation Ltd v Star of Africa Air Charters Ltd and 2 Others (High Court Civil Suit No. 431 of 2014)
  • Nilecom Limited v Kodjo Enterprises Limited (Civil Suit No. 0018 of 2014)
  • L'Estrange v F Graucob Ltd [1934] 2 KB 394

Full judgment

↓ Download PDF

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

Taremwa & 2 Others v Goetz & 2 Others (Civil Suit 548 of 2018; Civil Suit 766 of 2016) [2023] UGCommC 266 (1 November 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.