Commodity Export International & anoer v MKM Trading Company Ltd &anoer (Civil App.No. 96 of 2005) [2006] UGCA 40 (16 June 2006)

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JUSTICE S. G. ENGWAU, JA. \line }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid5650740 \tab \tab }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid5650740 HON. JUSTICE A. TWINOMUJUNI, JA. \line }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid5650740 \tab \tab }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid5650740 HO}{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid5650740 N. JUSTICE C. N. B. KITUMBA, JA. \par }\pard \ltrpar\s15\qc \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid5650740 {\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid5650740 C}{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid5650740 IVIL APPLICATION NO.96 OF 2005 \par }\pard \ltrpar\s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid5650740 {\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid5650740 1. COMMODITY }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid6034077\charrsid5650740 EXPORT INTERNATIONAL \line 2. }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid5650740 KARIM SOMANI:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::APPLICANTS \par }\pard \ltrpar\s15\qc \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid5650740 {\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid5650740 VERSUS \par }\pard \ltrpar\s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid5650740 {\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid6034077\charrsid5650740 1. MKM TRADING COMPANY LTD. \line 2. JAHEDD MANAGEMENT COMPANY \line }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid5650740 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid6034077\charrsid5650740 ESTABLISHMENT LTD:::::::::::::::::::}{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid5650740 :::::}{ \rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid6034077\charrsid5650740 :}{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid5650740 :::::::::::::::::::::::::}{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid6034077\charrsid5650740 :::::::: RESPONDENTS }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid5650740 \par }\pard \ltrpar\s15\qc \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid5650740 {\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \b\i\insrsid6034077\charrsid5650740 [Arising out of Civil Appeal No.61 of2005J}{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \b\i\insrsid5650740\charrsid5650740 \par }\pard \ltrpar\s15\qj \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid12460637 {\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\ul\insrsid6034077\charrsid12460637 RULING OF THE COURT }{ \rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid5650740 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 This is an application by notice of motion brought under rules 5(2) 42(1) of the Court of Appeal Rules. It seeks for the following or}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5650740 ders. }{ \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5650740 \par }\pard \ltrpar\s15\qj \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\ipgp1\pararsid5650740 {\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid5650740\charrsid11754974 \'93(a}{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid11754974 ) }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \b\i\insrsid6034077\charrsid11754974 The }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \b\i\insrsid5650740\charrsid11754974 proceedings in the High Court (Commercial Division) }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \b\i\insrsid6034077\charrsid11754974 in HCCS No. 298 of 2001 be stayed pending the deter}{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \b\i\insrsid5650740\charrsid11754974 mination of the appeal herein. \par }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \b\i\insrsid6034077\charrsid11754974 (b) The costs of and incidental to the application abide the result of the }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \b\i\insrsid5650740\charrsid11754974 appeal}{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \b\i\insrsid6034077\charrsid11754974 \'94 }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \b\i\insrsid5650740\charrsid11754974 \par }\pard \ltrpar\s15\qj \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid12460637 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 The main grou}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5650740 nds of the application are: \par {\listtext\pard\plain\ltrpar \s15 \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 \hich\af0\dbch\af0\loch\f0 1.\tab}}\pard \ltrpar\s15\qj \fi-360\li720\ri0\sb100\sa240\sbauto1\sl360\slmult1 \widctlpar\wrapdefault\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\ipgp1\pararsid12460637 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 The applicants have filed a notice of appeal against the decision and order of the Honourable Lord Justice Egonda}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5650740 -}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 Ntende in Misc. Application No. 214of 2005 an}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5650740 d have since filed the appeal. \par {\listtext\pard\plain\ltrpar \s15 \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 \hich\af0\dbch\af0\loch\f0 2.\tab}}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 That, despite the appeal, the respond}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5650740 ent intends to continue with }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 the hearing of the above suit and the hearing has been}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5650740 fixed for 19th January 2006.

\par {\listtext\pard\plain\ltrpar \s15 \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 \hich\af0\dbch\af0\loch\f0 3.\tab}}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 The hearing of the main suit is likely to be completed before the hearing of the appeal which w}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5650740 ould defeat the appeal. \par }\pard \ltrpar\s15\qj \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid5650740 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 The notice of motion is supported by }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5650740\charrsid12460637 the}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 affidavit of Karim Somani, the second applicant, sworn on 3rd }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid11754974 October }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \insrsid6034077\charrsid11754974 2005. }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid11754974 There}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 is an affidavit in reply sworn by Mervin Melville, the director of MIKM Trading Company Ltd, the respondent. Further, there is an additional affidavit sworn by the second applic}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5650740 ant on 17th February 2006. \par }\pard \ltrpar\s15\qj \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid12460637 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 The following is the brief background to the application. Commodity Export International, hereinafter to be referred to as the first applicant, entered into a joint venture agreement with MKM Trading Company Ltd. and Jahedd Management Company Establ}{ \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid5650740 ishment Ltd, hereinafter to be }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 referred to as the respondents. After the conclusion of the joint venture the respondents sued the first applicant in HCC Suit No. 496 of 2001. The suit w}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7416569 as filed in the High Court on 1}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 5th June 2001 and subsequently in the Commercial Court Division as Civil Suit No. 298 of 2001. The respondents filed Miscellaneous Applic}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7416569 ation No. 213 of 2005 in which}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 they sought to amend the plaint. The ap}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7416569 plication was allowed. On 16th }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 March 2005 the respondents filed Miscel}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7416569 laneous Application No. 214 of }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 2005 seeking to lift the corporate veil of t}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7416569 he first applicant company and }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 to add the second applicant as a p}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7416569 arty to the suit. On June 2005 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 Egonda-Ntende, J. allowed the application. The applicants filed a notice of appeal against the said ruling. Subsequently, they filed a memorandum of appeal. The respondents amended their plaint and included the second applicant as a party to the suit. The applicants fi led their defence to the suit. The applicants filed t}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1997972 he instant application to this }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 Court on the }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1997972 grounds already mentioned. \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 During the hearing of the application, the applicants were represented by learned counsel, Mr. Sekabanja Kato. Learned counsel, Joseph Luswata,}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1997972 appeared for the respondents. \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 Counsel for the applicants submitted that despite the fact that the applicants had lodged an appeal in this Court, the respondents }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid1997972 intend }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \insrsid1997972\charrsid1997972 to}{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \insrsid6034077\charrsid1997972 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid1997972 continue with the hearing of the suit in the Commercial Court. He argued that the ruling of the judge}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 that allowed the lif}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1997972 ting of the corporate veil, in }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 essence, disposed off the issue in the suit. According to counsel, the applicants would be prejudiced b y the continued hearing of the suit before the determination of the appeal because the lifting of the corporate was based on two grounds, namely: }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1997972 \par {\listtext\pard\plain\ltrpar \s15 \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 \hich\af0\dbch\af0\loch\f0 1.\tab}}\pard \ltrpar\s15\qj \fi-360\li720\ri0\sb100\sa240\sbauto1\sl360\slmult1 \widctlpar\wrapdefault\aspalpha\aspnum\faauto\ls2\adjustright\rin0\lin720\itap0\ipgp1\pararsid1997972 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 That, the second applicant had}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1997972 transferred the assets of the }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 first applicant to defeat a}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1997972 ny resultant judgement and \par {\listtext\pard\plain\ltrpar \s15 \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 \hich\af0\dbch\af0\loch\f0 2.\tab}}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 That, the se}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1997972 cond applicant was fraudulent. \par }\pard \ltrpar\s15\qj \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid12460637 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 Counsel argued that as the order to lift the }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1997972 corporate veil had been granted}{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid6034077\charrsid12460637 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 so as to proceed against the second applica}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1997972 nt personally, the respondents }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 do not have to prove fraud. He contended that the judge had prejudged the issue and wondered how the hearing of the Suit can be continued before the same judge. }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1997972 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 In reply, counsel for the respondent opposed the application. He submitted that the court\rquote s power to lift the corporate veil is discretionary. It is trite law that the appellate court would not interfere with the discretionary powers unless it is shown}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7751791 that the powers were wrongly }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 exerc}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1997972 ised. \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 Counsel disagreed with the applicant\rquote s counsel contention that the trial judge had prejudged the issue o f fraud as far as the applicants were concerned. He argued that lifting a corporate v}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7751791 eil is normally on grounds }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 of fraud. It is proper that it is done a}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7751791 t}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 the beginning so that a person concerned is given a chance to make a defence. Counsel argued that stay of proceedings is exercised in special circumstances but }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7751791 the applicants had not advanced}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 any. He submitted that the judge\rquote s ruling that allowed the lifting of the corporate veil was merely a}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7751791 n interlocutory order, which}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 could be made a ground of appeal in case there is an appeal in the main suit. In support of his submissions he relied}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid7751791 on the following authorities: }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid12460637 DFCU Vs Begmohamed Ltd. C. A. Civil Appeal No. 65 of 2005, Sanyu Lwanga Musoke Vs Sam Galiwango S. C. Civil Appeal No. 45 of 1995 and in The Estate of Osman Brothers No. 2 1923-60 ALR}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 }{ \rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid7751791 367 (Malawi). \par }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \insrsid6034077\charrsid8409046 Mr. }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid8409046 Sekabanja argued in reply that the applicants could not wait until the appeal in the main suit because this involves a corporate personality. In case the Suit proceeds, the second applicant w}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 ould be greatly prejudiced. }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid8409046 In support of his submission, counsel relied on }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid8409046 Hal}{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 sbury\rquote s }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 Laws of }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 England }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 4th }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 Ed. Para }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 437}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 which reads in part:

\par }\pard \ltrpar\s15\qj \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\ipgp1\pararsid8409046 {\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 \'93 Nature of stay of proceedings. A stay of proceedings arises under an order of the court which puts the stop or \'93stay\'94 on the further conduct of the proceedings }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 in }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 that court at the stage which they have then reached, so that the parties are precluded thereafter from taking any further step in the proceedings. The object of the order is to avoid the trial or hearing o f the action taking place, where the court thinks it is just and convenient to make the order, to prevent undue prejudice being occasioned to the opposite party or to prevent the abuse of process. The order is made generally }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 in }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 the exercise of the court\rquote s discretionary jurisdiction, and by way of summary process, that is without a trial }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid8409046\charrsid8409046 on}{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid8409046 the substantive merits of the case, and, at any rate in the exercise of its inherent jurisdiction, an order for the stay of proceedings is made very sparingly and only in exceptional circumstances.\'94 }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid8409046\charrsid8409046 \par }\pard \ltrpar\s15\qj \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid12460637 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 We have }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046\charrsid12460637 carefully}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 perused }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 all documents filed by the parties and listened to their counsel\rquote s submissions. We note that after considering the matter before him, the learned judge made an order to lift the veil and to add the second applicant as defendant to the suit. He was satisfied that such an order was necessary to effectively and }{ \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 completely adjudicate upon the }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 matters in dispute between the parties. The judge used his discretionary powers. As rightly pointed out by counsel for the respondents, this Court would not interfere with discretionary powers of a trial court unless the judge used such powers wrongly. In the instant application the applicants\rquote learned counsel has not demon}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 strated to us in which way the}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 judge was wrong}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 in the use of his discretion. \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 Applicants\rquote counse1s submission has been only that the applicants and more especially, the second applicant would be prejudiced because this is a company matter. The second applicant is protected by the legal corporate perso nality of the company. With due respect, this argument is not tenable. The legal personality of a company does not protect a director or a shareholder for the purpose of defrauding the company itself or members of the public. In the instant appeal, the }{ \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 respondents allege }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 that the second applicant defrauded them. This is a matter for investigation. \line We do not accept applicant\rquote s counsel submission that when the learned judge allowed the lifting of the corporat}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 e veil and adding the second }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046\charrsid12460637 applicant}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 as party to the action, he preju}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 dged the issue of fraud as far as the second applicant is concerned. In paragraph 12A of the amended plaint, which is Annexture \'93A\'94 to the affidavit in reply, fraud is pleaded. It will have to be proved by the respondents duri}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 ng the trial of the main suit. \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 This Court\rquote s power to stay proceedings is discretionary and would be exercised by this Court in exceptional circumstances. As stated by this Court in }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid8409046 DFCU Ltd Vs Be}{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid12460637 gmohamed Ltd, (supra), }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 we should be mindful of the backlog in the Hig h Court. This Court should not, \line therefore, stay proceedings in the High Court unless it is absolutely necessary. We also take note of the fact that the matter in this application concerns an interlocutory order that the applicant could make a ground of ap peal. A multiplicity of suits should be avoided. See. }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid6034077\charrsid12460637 Sanyu Lwanga }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 Mu}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 soke Vs Sam Galiwango (supra). \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid12460637 For the foregoing reasons, we are of the view that this application is devoid of merit. In the result it is accordingly dismissed }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 with costs to the respondents. \par }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \insrsid6034077\charrsid10769789 Dated at Kampala this }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10769789\charrsid10769789 16}{\rtlch\fcs1 \af0 \ltrch\fcs0 \super\insrsid10769789\charrsid10769789 th}{\rtlch\fcs1 \af0 \ltrch\fcs0 \super\insrsid614912 }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \insrsid6034077\charrsid10769789 day of}{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \insrsid10769789\charrsid10769789 June}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid6034077\charrsid10769789 }{ \rtlch\fcs1 \ai\af0 \ltrch\fcs0 \insrsid6034077\charrsid10769789 2006. }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \insrsid8409046\charrsid10769789 \par }\pard \ltrpar\s15\qj \li0\ri0\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid8409046 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10769789 \par S. G. Engwau}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 \par JUSTICE OF APPEAL \par }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid10769789 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10769789 \par A. Twinomujuni \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 JUSTICE OF APPEAL \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10769789 \par \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid8409046 C. N. B. 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