Chen & 2 Others v Zhang & Another (Miscellaneous Application 822 of 2024) [2024] UGHCCD 196 (20 November 2024)

# **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA [CIVIL DIVISION]**

# **MISCELLANEOUS APPLICATION NO. 0822 OF 2024 [Arising from Miscellaneous Application No. 416 of 2022] (Arising from Civil Suit No. 0220 of 2022)**

| 1. | CHEN CHAN | |----|-------------------------------------------------------------------------------------------| | 2. | HUANG YOU::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANTS | | 3. | CHEN ZIPING |

#### **VERSUS**

| 1. | ZHANG JUN | | |----|------------------------------------------------------------------------------------------|--| | 2. | HU ZHENG:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENTS | |

#### **BEFORE: HON. JUSTICE SSEKAANA MUSA**

#### **RULING**

The Applicant filed an application Under Section 98 of the Civil Procedure Act, Section 33 of the Judicature Act and Order 52 rules 1 and 2 of the Civil Procedure Rules for the following orders:

- *1. A declaration that the respondents acted in contempt of the court order of temporary injunction granted vide Misc Application No. 416 of 2022 by transferring the company vehicles and withdrawing monies from the company bank accounts.* - *2. An Order directing the respondents to remit back the money they withdrew from the bank accounts in contempt of court order.*

- *3. An Order directing the company vehicles Registration UBD 790 and UBP and UBP 829K which the respondents transferred in contempt of the court Order be transferred back into the company names.* - *4. An Order that the above vehicles be impounded and packed at company premises.* - *5. An Order that the respondents be committed to civil prison for contempt of the Court Order.* - *6. In alternative an order that the respondents pay a fine for contempt of a court order as the court deems necessary.* - *7. An order that the respondents pay exemplary and general damages to the applicant for contempt of the court Order.* - *8. A permanent injunction restraining the respondents from further contempt of the orders granted by this court.* - *9. Costs of this application.*

In support of the application, the 1 st applicant filed an affidavit in support of the application dated 20th August, 2024 contending that;

- 1. The applicants instituted civil suit No. 220 of 2022 against the respondents seeking for the breach of the shareholders' cooperation agreement in the company-Entec Electrical Equipment Co. Ltd. - 2. That the applicants secured an order of temporary injunction vide Misc. Application No. 416 of 2022 restraining the respondents from and their agents from operating company accounts and transferring company motor vehicles into their names.

- 3. The respondents violated the orders of temporary injunction and made withdrawals on company accounts and transferred company vehicles in their names. - 4. That the application ought to be granted to protect the sanctity of court in administration of justice and punish the respondents for their contemptuous conduct. - 5. That the respondents knew about the existence of the court order since the same was granted in their presence and in presence of their lawyers but decided to act contrary to the same. - 6. That the applicants have suffered a lot of financial loss, mental anguish and psychological torture as a result of the acts of the respondents hence the prayer for general damages. - 7. That it is interest of justice that the respondents remit back all the money withdrawn from the company bank accounts during the pendency of the court order. - 8. It is further in the interest of justice that the vehicles transferred by the respondents during the subsistence of the court be transferred back into the company names and the same be impounded from wherever they are and be parked at the company premises.

The applicants filed another supplementary affidavit deposed by A/AIP Okello Julius Peter who adduced evidence of ownership of the motor vehicles in question and an Investigative Audit report in the operation of Entec Electrical Equipment Co. Ltd which showed how the company lost colossal sums of money through several withdrawals from the bank accounts.

#### *ISSUES*

- *1. Whether there was a contempt of court order by the respondents?* - *2. What remedies are available to the applicant?*

The applicants were represented by *Counsel Golooba Muhammed* and *Counsel Mulumba Rashid* whereas the respondents were represented by *Counsel Twinomugisha Daniel.*

At the hearing of this application the parties were directed to file written submissions which I have had the occasion of reading and considering in the determination of this application.

## *DETERMINATION.*

# *Whether there was a contempt of court order by the respondents?*

The applicant's counsel cited the case of *Uganda Super League v Attorney General Constitutional Application No.73 of 2013* wherein *Justice Kiryabwire* citing the Black's law Dictionary 7th Edition that defines Contempt of courts as;

*"Conduct that defies the Authority or dignity of court.*" He went on further to cite with Approval Halsbury's laws of England [ Volume 9, 4th Edition] wherein Contempt of court was classified in two categories; *Criminal contempt which is committed by words or acts that impede Administration of justice and Civil Contempt which arises when there is disobedience to judgment, orders or other court process and involves private jury."*

The applicant's counsel contended that the respondents' had the ability to comply with an order of temporary injunction but declined and the disobedience of the court order was willful and voluntary and for personal gains. The respondents made several withdrawals from the company bank accounts during the subsistence of the court order.

The police are investigating a case of embezzlement of company funds and the respondents withdrew a sum of 2,527,072,371/= from UBA Bank Account Number 0103016912 between 15th November 2022 to 10th January 2024. The respondents also withdrew a sum of 400,250,000/= from Equity Bank between 16th November 2022 to 29th January 2024.

The respondents further disobeyed the court when they transferred 2 motor vehicles on 30th September 2022 Land Cruiser VXR Registration Number UBD 790C and Land Cruiser Prado UBP 829K

The above acts were committed by the respondents with impunity, full knowledge of the existence of lawful court order and amounted to violation of the same in disrepute of the sanctity of court in administration of justice which ought to be punished to deter further actions.

#### *Analysis*

Any course of conduct which abuses and makes a mockery of the judicial process and which thus extends its pernicious influence beyond the parties to the action and affects the interest of the public in the administration of justice, is contempt of court. The rationale is about preserving and safeguarding the rule of law. A party who walks through the justice door with a court order in his hands must be assured that the order will be obeyed by those to whom it is directed.

This is because the public has an interest and a vital stake in the effective and orderly administration of justice. The Court has the duty of protecting the interest of the public in the due administration of justice. The power to punish for contempt of court is a special jurisdiction which is inherent in all courts for the protection of the public interest in the proper administration of justice, as Lord Atkin observed in *Andre Paul Terence Ambar Appeal No. 46 of 1935 v. The Attorney General of Trinidad and Tobago (Trinidad and Tobago) [1936] 1 All ER 704, [1936] AC 322*;

Every judicial officer presiding over court proceedings has the power to punish for contempt.

However, for contempt that is not committed in the face of the court, this kind of contempt is *sui generis*. It is usually initiated by a litigant who by motion brings to the attention of court, conduct believed to be in contempt of court. All contempt proceedings are matters between the court and the alleged contemnor.

Any person who moves the machinery of the court for contempt only brings to the notice of the court certain facts constituting contempt of court. After furnishing such information he or she may still assist the court, but it must always be borne in mind that in a contempt proceeding there are only two parties, namely, the court and the contemnor.

However, since, the contempt proceedings are not in the nature of criminal proceedings, it is open to the Court to cross-examine the contemnor and even if the contemnor is found to be guilty of contempt, the Court may accept apology and discharge the contemnor. This peculiar feature distinguishes contempt proceedings from criminal proceedings.

There is a clear line of distinction between proceedings for contempt initiated by the Court on its own motion, and those initiated as civil contempt by the motion of a private litigant.

A proceeding for civil contempt is regarded as a form of execution and enforcement of the order alleged to have been violated to the detriment of a private party. It is in the nature and form of appeal for execution or enforcement of the court's order, for the benefit of a party. The right of a private party to move the court for civil contempt is therefore regarded as remedial. Such proceedings are thus governed by the limits of the civil jurisdiction of court.

Section 98 of the CPA gives the High Court unlimited original jurisdiction in all matters and such appellate and other jurisdiction as may be conferred on it by this Constitution or other law (see Article 139 (1) of *The Constitution of the Republic of Uganda, 1995*).

The position of the law is that for contempt of court to be found, the following principles have to be established: -

- Existence of a lawful order. - Potential contemnor's knowledge of the order. - Potential contemnor's failure to comply, that is, disobedience of the order.

#### *Existence of a lawful order.*

Evidence was led to show that a court order vide Misc. application No. 416 of 2022 was granted on the 29th September 2022 .

# " *IT IS HEREBY ORDERED THAT:*-

*1. A temporary injunction be and is hereby granted restraining the respondents, their workers, agents and /or all people deriving interest from them, from selling any property of the 3rd respondent, transferring shares of the 3rd respondent, transferring the 3rd respondent's land comprised in Tororo Block 4 LRV 3475-14, Folio 13 Plot 265 land at Tororo, Block 5 Plot 1732 Folio 10 LRV TOR 2, selling the 3rd respondent's chattels, manufacturing plant equipment, raw materials, finished products, spare parts and company vehicles registration Nos UBG866E, UBG 9554E, UBG 868E and UBG 867E, operating the 3rd respondent's bank accounts to wit; A/C No. 103016821 UBA Bank, Stanbic Bank USD A/C 9030013767342 and 9030013767261, Equity Bank USD A/C 1009202331057 or dealing with 3rd respondent in any manner that may be prejudicial to the interests of the applicants and the 3rd respondent until the determination of the main suit"*

The respondents were aware of the said order and they appealed it to the Court of Appeal vide Civil Appeal No. 26 of 2023 and applied for an interim and main stay of execution of the order of temporary injunction vide Civil Applications 75 and 76 which were heard and dismissed by the court of appeal.

This demonstrates the respondent's knowledge of the existence of a court order but still they decided to act contrary to the same. It would appear the period of appeal to Court of Appeal was intended to facilitate the breach of the court order.

#### *Potential contemnor's knowledge of the order.*

The general principle is that a person cannot be held in contempt without knowledge of the court order. A party who knows of an order regardless of whether, in view of that party, the order is null or valid, regular or irregular cannot be permitted to disobey it by reason of what that party regards the order to be. It is not for that party to choose whether or not to comply with such order. The order must be complied with in totality.

Conclusively a court order is not a mere suggestion or an opinion or a point of view. It is a directive that is issued after much thought and with circumspection. It must therefore be complied with and it is in the interest of every person that this remains the case.

I find that the 1st respondents 'non-compliance with the orders of court amounted to contempt and they acted with impunity and in total disregard of the lawful court order.

#### *What Remedies are available to the Applicant?*

The Applicant prayed to court seeking a number of remedies as a result of the respondents conduct against the lawful order of court to the detriment of the applicants.

Decided cases indicate that examples of punishments for Civil contempt are derived from the common law decisions, where the punishments are provided for in the Contempt of Court Act (1981). It has been established that Uganda has no equivalent of the Contempt of Court Act however courts have made it clear that disobedience of civil orders is known and ought not to be allowed by courts.

The court having found the respondents to be in contempt of court, there is no justifiable excuse for the respondents to have continuously disobeyed the court order even after the Court of Appeal had dismissed their application for stay and also dismissing the appeal. Therefore, what is left for court is to determine the remedies available.

Disregard of an order of the court is a matter of sufficient gravity whatever the order maybe as reiterated in *Stanbic Bank (u) Ltd vs. Commission General Uganda Revenue Authority* and that Court of law never acts in vain and as such, issues touching on contempt takes precedence over any other case of invocation of the jurisdiction of Court.

The High Court is enjoined to exercise its jurisdiction in conformity with the common law and doctrines of Equity where by its obliged to exercise its discretion in conformity with principles of Justice, equity and good conscience respectively. *See sec.14(2) (b) (1) and 14(2) (c) of the Judicature Act.*

Civil contempt is punishable by way of committal to civil prison or by way of Sequestration. It can also be punishable by way of fine or an injunction against the contemnor. *See Stanbic Bank (U) Ltd Vs Commission General Uganda Revenue Authority (supra).*

According to the case of *Re Contempt of Dougherty 429, Michigan 81, 97 (1987), I*mprisonment for civil contempt is properly ordered where the defendant has refused to do an act affirmative act by the provisions of an order which either in form or substance was mandatory in character.

Further that if the contempt consists in refusal of a party to do something which he is ordered to do for the benefit and advantage of the opposite party, the contemnor stands to be committed until he complies with the order. The order in such a case is not a punishment but rather to compel the contemnor to act in accordance with the order of the court.

This court has already found in the present case the respondent refused to obey the orders of court and the temporary injunction orders were mandatory in character and would have been for the benefit of the applicant.

In the circumstances of this case, the court gives the following orders;

- *1. An Order directing the respondents to remit back the money they withdrew from the bank accounts in contempt of court order in the total sum of 2,927,332,371/= within 3 months.* - *2. An Order directing the company vehicles Registration UBD 790 and UBP and UBP 829K which the respondents transferred in contempt of the court Order be transferred back into the company names and be returned to the company.* - *3. An Order that the above vehicles be impounded and returned to the company premises with immediate effect. If they fail to return the vehicles they be arrested and committed to civil prison for contempt of the Court Order until when the vehicles are returned.* - *4. An order that the respondents pay exemplary damages of 200,000,000/= to the applicants and general damages of 300,000,000/= to the company (Entec Electrical Equipment Co Ltd) for the inconvenience to the company.* - *5. The court shall not determine the application filed by the respondents vide Miscellaneous Application No. 0802 of 2024 since they have been found to be in contempt and the same is struck out.*

The application is allowed with costs to the applicants

I so order.

*SSEKAANA MUSA JUDGE 20 th November 2024*