Wakilii

United Bank For Africa (Uganda) Limited v Ababasafaris Limited and Others (Civil Suit No. 555 of 2015)

High Court · [2017] UGCOMMC 304 · 2017 Preliminary Objection Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Ruling on preliminary objection in a first instance civil suit for breach of Acquirer/Merchant agreements
Decision
Preliminary objection dismissed; matter proceeds to hearing on merits

Observed later treatment

Cited — treatment unverified cited in 1 (treatment unverified) Sequitur — Uganda’s citator · Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

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.

No adverse treatment recorded Cited 1 time with no adverse treatment recorded; not yet tested on the merits. Derived from citing cases in the Wakilii corpus — a deterministic signal, not legal advice.

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 a plaint discloses a cause of action against individual directors or shareholders sued alongside companies where the plaint alleges personal involvement in fraudulent transactions or specific insistence on personal participation in agreements, even where merchant agreements were executed with corporate entities. Separate legal personality does not bar joining directors personally where fraud is alleged and evidence of their individual actions is pleaded. Preliminary objection dismissed.

Outcome

Preliminary objection dismissed; matter proceeds to hearing on merits

Facts

The plaintiff bank filed suit against 26 defendants for breach of Acquirer/Merchant agreements. The agreements were executed with corporate entities (the 3rd, 10th, 15th defendants and Laftaz Comedy Lounge Ltd). However, the plaintiff also sued certain individuals (the 16th, 17th, 18th, 22nd, 23rd and 24th defendants) who were directors or shareholders of those companies. The plaint alleged that the 16th-18th defendants insisted that encoded identification numbers for their respective companies be issued in their personal names, and that all named individuals participated in fraudulent transactions including presenting fictitious transaction evidence and forged signatures. The 22nd-24th defendants were alleged to trade in partnership as Laftaz Comedy Lounge (though they later produced a certificate of incorporation showing Laftaz Comedy Lounge Limited was a registered company). The defendants raised a preliminary objection that the individuals could not be sued personally for contracts made with their companies, relying on the doctrine of separate legal personality established in Salomon v Salomon.

Issues

  1. Whether the plaint discloses a cause of action against the 16th, 17th, 18th, 22nd, 23rd and 24th defendants.
  2. Whether the plaintiff is entitled to lift the companies' veils of incorporation without first making an independent application to court.

Orders

  • Preliminary objection raised by the defendants is overruled/dismissed.
  • Costs awarded to the plaintiff.
  • Matter to be expeditiously scheduled for hearing on its merits.

Rules and key headnotes

Civil Procedure — Cause of Action — Test for Disclosure
A cause of action means every fact which is material to be proved to enable the plaintiff to succeed, and the ingredients are: (i) the plaint must show that the plaintiff enjoyed a right; (ii) that right has been violated; and (iii) the defendant is liable. The question of whether a plaint discloses a cause of action is determined by perusal of the plaint and attachments with the assumption that the averments are true.
Company Law — Corporate Personality — Lifting the Corporate Veil — Directors' Personal Liability for Fraud
The doctrine of separate legal personality does not bar the bringing of a suit against a director or shareholder in their personal capacity where fraud is alleged. It is open to a plaintiff to sue both the company and its directors personally where allegations of fraud have been raised, and the question of the directors' personal liability will be determined after hearing evidence. Section 20 of the Companies Act empowers the court to lift the veil of incorporation and hold individuals liable for fraud committed behind the corporate veil.
Civil Procedure — Joinder of Parties — Order 1 Rule 3 CPR — Fraud Allegations
Order 1 rule 3 of the Civil Procedure Rules allows all persons to be joined as defendants against whom any right to relief in respect of or arising out of the same act or transaction is alleged to exist, whether jointly, severally or in the alternative, where common questions of law or fact would arise. Directors or shareholders may be joined as defendants alongside corporate entities where they are allegedly involved in the same fraudulent transactions.
Company Law — Corporate Personality — Personal Participation by Directors in Contractual Arrangements
Where a plaint alleges that directors or shareholders specifically insisted that contractual arrangements (such as encoded identification numbers) be issued in their personal names rather than solely in the company's name, and that they personally participated in the transactions giving rise to the claim, a cause of action is disclosed against them individually notwithstanding that the underlying agreements were made with their companies.

Legislation cited (2)

Cases cited (10)

  • Salmon v Salmon & Co. Ltd (1897) AC 22
  • Attorney General v Major General David Tinyefuza (Constitutional Appeal No. 1 of 1997)
  • Sikuku Agaitano v Uganda Baati Ltd (High Court Civil Suit No. 298 of 2012)
  • Auto Garage & others v Motokoo (No.3) (1971) EA 514
  • Attorney General v Oluoch (1972) EA 392
  • Stanbic Bank Uganda Ltd v Ducat Lubricants (U) Ltd & 3 Others (Miscellaneous Application No. 845 of 2013)
  • Tororo Cement Co. Ltd v Frokina International Ltd (Court of Appeal No. 2 of 2001)
  • Jeraj Sharif v Fancy Stores [1960] EA 374
  • Sukuku Agaitano v Uganda (High Court Civil Suit No. 298 of 2014)
  • Shumuk Springs Development Ltd & others v Joseph Sempebwa & others (Miscellaneous Application No. 502 of 2013)

Cases citing this judgment (1)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

Full judgment

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

United Bank For Africa (Uganda) Limited v Ababasafaris Limited and Others (Civil Suit No. 555 of 2015) [2017] UGCommC 304 (24 March 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.