Wakilii

United Assurance Company Limited v Attorney General (Civil Appeal 1 of 1986)

Supreme Court · [1986] UGSC 18 · 1986 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from a High Court judgment dismissing a suit on preliminary points
Decision
Appeal allowed; dismissal set aside and suit reinstated for hearing in the High Court on the outstanding issues.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The appeal was allowed. A validly remaining sole director of a private company has authority under section 177 of the Companies Act and regulation 80 of Table A to instruct advocates to institute proceedings in the company's name, without any resolution of the board or shareholders; no ratification was required. The trial judge misdirected himself in dismissing the suit as unmaintainable: a company is a legal entity separate from its shareholders, so the suit property remained vested in the company, and whether its compulsory acquisition was constitutional under Article 13 was a substantive issue requiring trial, possibly with a reference to the constitutional court under Article 87(1). The dismissal was set aside and the suit reinstated.

Outcome

Appeal allowed; dismissal set aside and suit reinstated for hearing in the High Court on the outstanding issues.

Facts

United Assurance Co. Ltd, a private company, owned Plot 1, Kimathi Avenue, Kampala. After the departure of its Asian majority shareholders in 1972, their shares vested in the Departed Asians Property Custodian Board under Decree 27 of 1973. By Statutory Instrument No. 69 of 1978 the Minister, exercising powers under the Land Acquisition Act 1965, purported to compulsorily acquire the suit property, intending to donate it to Uganda Airlines. The company, acting through Mr. Kyeyune, its sole remaining director, sued the Attorney General seeking declarations that the acquisition contravened the Constitution and was null and void. The trial judge dismissed the suit on preliminary points, holding it unmaintainable in view of the Expropriated Properties Act 1982 and that the single director lacked authority to instruct counsel to bring the suit, and ordered costs against the advocates personally.

Issues

  1. Whether the trial judge was wrong in holding that the action did not involve interpretation of the Constitution and ought not to be referred to a constitutional court.
  2. Whether the suit property vested in the Government under the Expropriated Properties Act 1982, rendering the suit unmaintainable.
  3. Whether a single director of a private company may authorise the institution of proceedings in the company's name without a resolution of the board or the shareholders.
  4. Whether subsequent ratification of the director's instructions by the shareholders was necessary.
  5. Whether the order for costs against the appellant's advocates personally was properly made.

Orders

  • Appeal allowed.
  • Dismissal of the suit set aside and the suit reinstated for hearing in the High Court on the issues framed and not dealt with.
  • Order awarding costs against the advocates personally set aside.
  • Costs of the appeal and in the court below awarded to the appellant.
  • High Court directed to refer to the constitutional court, under Article 87(1) of the Constitution, any question arising that requires interpretation of the Constitution.

Rules and key headnotes

Company Law — Directors — Authority of sole director of private company to institute proceedings
A director who is the sole validly remaining director of a private company is entitled, under section 177 of the Companies Act and regulation 80 of Table A, to instruct advocates to institute proceedings in the company's name without a resolution of the board or of the shareholders in general meeting.
Company Law — Separate legal personality — Company property distinct from shareholders' shares
A company is a legal entity separate from its shareholders; where the departed shareholders' shares vest in the State, the company's property remains vested in the company and does not thereby vest in the Government.
Company Law — Ratification — Whether required where authority exists
Where a director has authority to institute proceedings, no ratification by the shareholders is required; ratification is necessary only where the Companies Act or the articles of association expressly require it.
Civil Procedure — Objection to authority to sue — Stage at which it must be raised
An objection that proceedings were instituted without the company's authority should ordinarily be raised by interlocutory application before trial, not at the trial, and the court will not strike out the suit on that ground at trial unless want of authority plainly appears.
Statutory Interpretation — Expropriated Properties Act 1982 — Vesting and maintainability of suit
Whether property was "appropriated or taken over in any other way by the military regime" and so vested in the Government under section 1(1)(c) of the Expropriated Properties Act 1982 cannot be determined without first deciding whether the taking over under the Land Acquisition Act 1965 was constitutional; that substantive question must be tried and cannot be disposed of as a preliminary point.
Constitutional Law — Reference to constitutional court — Article 87(1) of the Constitution
Where a question of interpretation of the Constitution involving a substantial question of law arises in proceedings, the court may, and must if a party so requests, refer the question to a High Court bench of not less than three judges under Article 87(1) of the Constitution.
Civil Procedure — Costs — Order against advocates personally
An order for costs against advocates personally founded solely on want of authority to institute the suit cannot stand where the advocates were in fact properly instructed.

Legislation cited (12)

Cases cited (7)

  • Quin & Axten Ltd v Salmon [1909] AC 442
  • John Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113
  • Danish Mercantile Co Ltd v Beaumont [1951] Ch 680
  • Marshall's Valve Gear Co Ltd v Manning Wardle & Co Ltd [1909] 1 Ch 267
  • Bugerere Coffee Growers Ltd v Sebadduka [1970] EA 147
  • Emco Plastica International Ltd v Freeborne [1971] EA 452
  • Duike Estate Coffee Ltd v Lutabi [1962] EA 328

Full judgment

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

United Assurance Company Limited v Attorney General (Civil Appeal 1 of 1986) [1986] UGSC 18 (6 October 1986)
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.