Greater Busoga Sugarcane Growers Co-operative Union v The Chairman Board of Directors, Uganda Development Corporation & 3 Others (Miscellaneous Application 129 of 2024) [2024] UGHCCD 84 (17 May 2024)

#### **THE REPUBLIC OF UGANDA**

# **IN THE HIGH COURT OF UGANDA AT KAMPALA**

#### **(CIVIL DIVISION)**

#### **MISCELLANEOUS APPLICATION NO. 129 OF 2024**

**(Arising out of Miscellaneous Cause No. 009 of 2024)**

#### **GREATER BUSOGA SUGARCANE**

**GROWERS CO-COPERATIVES UNION::::::::::::::::::::::::::::APPLICANT**

#### **VERSUS**

- **1. THE CHAIRMAN BOARD OF DIRECTORS, UGANDA DEVELOPMENT CORPORATION** - **2. THE EXECUTIVE DIRECTOR, UGANDA:::::::::::RESPONDENTS DEVELOPMENT CORPORATION** - **3. HORYAL INVESTMENT HOLDING COMPANY LIMITED** - **4. AYUU-ALALI SUGARCANE OUTGROWERS CO-OPERATIVE SOCIETY LIMITED**

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

#### **RULING**

This application is brought by way of chamber summons against the respondents under Section 38 (1) (d) (2), (3), (4), (5), (6) & (7) of the Judicature Act and Section 98 of the Civil Procedure Act Order 41rule 1 & 2 and 9, Order 52 r 1 & 3 the Civil Procedure Rules for orders that;

*1. An order of temporary Injunction doth issue restraining the 1 st and 2nd respondents from going ahead to pay the 3rd and 4th respondents their money which is a grant for transporting sugarcane and the cane itself without first defraying and paying Ugshs 172,900,800/= to the applicant which amount was loaned to the 3rd respondent on the* *persuasion or directive of the 1st and 2nd respondent pending the hearing and final disposal of the main application.*

- *2. An order of temporary injunction doth issue restraining the 2nd respondent from advancing any money to the 3rd respondent pursuant to the transporting, selling and availing sugarcane to the 2nd respondent under the auspices of Uganda Development Corporation without defraying and paying the applicant's money that she loaned to the 3rd respondent at the request and pursuant and directive of the 1st and 2nd respondents pending the hearing and disposal of the main application.* - *3. The costs of this Application be provided for.*

The grounds in support of this application are set out in the application and the supporting affidavit of Dr. Mugabira Imaka Micheal-The Projects Manager of the applicant Union which briefly states that:

- 1. That the applicant is a registered Co-operative Union under the Cooperative Societies Act that deals in the business of sugarcane growing, sugarcane transporting and marketing, among others and have been in business since 2019. - 2. That around the year 2020 there was a bumper harvest of sugarcanes grown in Busoga region so much so that the factories within and surrounding Busoga region could not consume up the sugarcane so grown leading to a crisis in the region. - 3. When this state of affairs turned into a crisis, the Government of Uganda through Uganda Development Corporation (UDC) the entity where the 1st and 2nd respondents operate from, issued a grant to the applicant to enable her transport the excess sugarcane from Busoga Region to Atiak Sugar Factory in Amuru District to avoid antagonizing the industry owing to high production costs.

- 4. That Atiak Sugar Factory is jointly owned by the Government of Uganda and other entities through an entity called Horyal Investment Holding & Company Ltd, the 3rd respondent herein with Uganda Development Corporation holding 40% shares on behalf of the Government of Uganda. - 5. The Government interests in Atiak Sugar Factory are thus overseen by Uganda Development Corporation Ltd pursuant to the said joint venture. - 6. That it was pursuant to an arrangement under the auspices of UDC through the 1st and 2nd respondents that the applicant was persuaded the applicant to divert some of her funds and lend them to the 4th respondent on the condition that the 1st and 2nd respondents was to defray it from the impending payment to the 4th respondent within the shortest time possible. - 7. That under this arrangement all the respondents undertook to work together to ensure that the applicant's money is refunded as soon as practicable which was supposed to be defrayed from payments/entitlements of the 4th Respondent and this was to be done by both the 1st and 2nd respondent without recourse to the internal management of the 4 respondent. - 8. By directive dated 12th October, 2023 the Minister for Trade, Industry and Co-operatives, the 1st and 2nd respondents were directed to pay the applicant's money directly to the applicant. - 9. That in a Board meeting of the 1st respondent that sat in Kampala in the week ending January 2024, and beginning February 2024, the 1st and 2nd respondent have instead reneged from the Ministerial Directive and has decided to first carry out and complete the verification exercise of the recipients of Ug Shs. 1,600,000,000/= with the 4th respondent before paying the applicant's money which is

supposed to be deducted at source as a cost and it is therefore not dependent on the verification exercise.

- 10. That the decision of the 1st and 2nd respondent is irrational, reckless, ultra vires the Ministerial directive unreasonable and an abuse of power on the part of the 1st and 2nd respondents who are the top management of UDC, which abuse of power should be checked by court in exercise of the powers bestowed on her by law. - 11. That whereas the stakeholders (the 4th respondent's beneficiaries) are amorphous, oblique and scattered all over, the 1st and 2nd respondents have gone ahead to decide to verify them, alter the decision of the Minister and an intra-stakeholder resolution reached by all parties hereto without giving the applicant any hearing while making changes that affect her economically and otherwise.

The respondents filed their respective affidavits in reply and in brief stated as follows;

- 1. That on 24th November 2020, the 3rd respondent entered into a memorandum of Understanding with the applicant for the supply of Sugarcane to Atiak Sugar Factory with support from the Government of Uganda through Uganda Development Corporation. - 2. By a Presidential Directive made on 6th December 2020, His Excellency Yoweri Kaguta Museveni directed the Ministry of Finance, Planning and Economic Development to provide funds to help the applicant transport sugarcane to Atiak Sugar Factory. - 3. That in the course of the implementation of the agreement, a meeting with the 3rd respondent and the applicant's representatives was held at Uganda Development Corporation's offices. During that meeting, the applicant stated that it wanted to advance money

to the 4th respondent to enable the 4th respondent harvest and transport sugarcane to Atiak Sugar Factory.

- 4. That the applicant's representatives were informed that Uganda Development Corporation could not be privy to the proposed loan facility, and that such discussions should be held outside the UDC offices. Consequently, Uganda Development Corporation did not participate in the transactions under which the applicant loaned UGX 172, 900,800/= to the 4th respondent. - 5. In 2023, Uganda Development Corporation received 1,600,000,000/= from Ministry of Finance, Planning and Economic Development with instructions to pay the said sum of money to the 4th respondent for sugarcane supplied to the Atiak Sugar Factory. - 6. In accordance with its standard finance policies and procedures, UDC requested for the 4th respondent to submit the identification and bank account details of the beneficiaries' for the verification payment. - 7. That on 22nd March 2023, the 4th respondent served on UDC a letter stating the number of beneficiaries to be paid was 1890 and also forwarded a list of beneficiaries. UDC commenced a verification of the beneficiaries listed between July and August. - 8. That subsequent to the verification exercise, the 4th respondent again wrote to UDC on 14th September 2023 instructing it to pay each of the 1890 beneficiaries UGX 846,560 directly into their personal bank accounts. - 9. That the 1,600,000,000/= which was transmitted to UDC by Ministry of Finance, Planning and Economic Development was tagged for payment to the 4th respondent; and the 1st and 2nd applicants are not clothed with authority and or discretion to reallocate or otherwise

deal with funds whose appropriation has been dictated by the disbursing authority.

- 10. That the Accounting Officer of UDC is the 2nd respondent and not the Minister of Trade, Industry and Cooperatives. Uganda Development Corporation Act, 2016 restricts the powers of Minister of Trade, Industry and Cooperatives to giving policy directives to Corporation regarding attainment of its object and not the power to make directions on payments. - 11. That under the UDC financial policies, payments should be made to creditors directly and necessitates the undertaking of reasonable due diligence that the right people have been paid. It was on this basis that Uganda Development Corporation undertook the verification exercise that the applicant has complained about.

## *Whether the court should grant a temporary injunction?*

The applicant was represented by *David Ssempala* while the 1 st and 2nd respondent was represented by *Francis Gimara (SC)* assisted by *Suki Lucy* and the 4 respondent was represented by *Bagala Mercy Edith*.

### **DETERMINATION**

The main question for this court to establish is whether in such circumstances the temporary injunction can still be justified. *See Regent Oil Co Ltd v JT Leavesley (Lichfield) Ltd [1966] 1 WLR 1210.*

The granting of a temporary injunction is an exercise of judicial discretion as was discussed in the case **of** *Equator International Distributors Ltd v Beiersdorf East Africa Ltd & Others Misc. Application No.1127 Of 2014.* Discretionary powers are to be exercised judiciously as was noted in the case of *Yahaya Kariisa vs Attorney General & Another, S. C. C. A. No.7 of 1994 [1997] HCB 29***.**

It should be noted that where there is a legal right either at law or in equity, the court has power to grant an injunction in protection of that right. Further to note, a party is entitled to apply for an injunction as soon as his legal right is invaded. *Titus Tayebwa v Fred Bogere and Eric Mukasa Civil Appeal No.3 of 2009.*

It is trite law that for an application to be maintained three conditions must be satisfied by the Applicant as was discussed in the case of *Muhumuza v Attorney General & 2 Ors (Miscellaneous Application No. 449 of 2020) [2020] UGHCCD 185 (28 August 2020)*:-that the applicant must show a prima facie case with a probability of success, that the applicant might otherwise suffer irreparable injury which would not adequately be compensated by an award of damages and if the court is in doubt, it would decide an application on the balance of convenience.

#### **PENDING SUIT WITH TRIABLE ISSUES**

The legal principle upon which Court exercises its discretion to grant a temporary injunction in all actions pending determination of the main suit is now well settled as seen in the wealth of authorities. *See Associate Professor Ssempebwa and Anor v Makerere University (Miscellaneous Application No. 21 of 2021) [2022] UGHCCD 62 (14 April 2022)*

The law for granting a temporary injunction is section 64(e) of the Civil Procedure Act and general considerations for the granting of a Temporary Injunction are set out under Order 41 Rule (1) & (2) CPR.

An interlocutory injunction is a court order to compel or prevent a party from doing certain acts pending the final determination of the case. It is an equitable remedy that aims to preserve the status quo by preventing one party from committing, repeating, or continuing a wrongful act prior to the trial. It is an order made at an interim stage during the trial and is usually issued to maintain the status quo until judgment can be made.

For that reason, there must be a subsisting suit pending before the court, from which the application is sought, that forms the basis from which the interlocutory application arises. *See Simba Properties Investment Company Limited and Another v Kirunda and 3 Others (Miscellaneous Application No. 671 of 2022) [2022] UGCommC 37 (15 June 2022).* In the instant case, the applicant filed an application for judicial review before this court challenging the refusal to be paid off their loan of 172,900,800/= and are seeking an order of Mandamus to compel the 1st and 2 nd respondent pay them before verification and at source. The applicant contends that the 1 st and 2nd respondent acted illegally or irrationally when they failed or refused to pay off the applicant's loan upon agreement and directive of the Minister.

The 1st and 2nd respondent denied being a party to the loan agreement advanced by the applicants to the 4th respondent. The 1st and 2nd respondent received instructions from Ministry of Finance, Planning and Economic Development on how the money was to be disbursed and it never included any deductions at source of the applicant's loan Money.

The applicant seems to hinge their argument or claim from a Ministerial directive that they should be paid at source without any verification exercise. The Ministerial directive should be rooted in the law and any illegal directives should found no claim in judicial review since it would tantamount to being an excessive abuse of authority.

The existence of triable issues in this case is not sufficient to issue a temporary injunction. The court must equally be satisfied that the triable issues are genuine and *bonafide* under the circumstances. The triable issues being raised by the applicant are not sufficient and sustainable in law since the directive of the Minister of Trade, Industry and Co-operatives on how money should be disbursed is illegal and null and void.

The courts when exercising power of judicial review have a duty of ensuring that the public body or officer has acted in accordance with the law or within the 'four corners' of the legislation or constitution and thus enforcing the rule of law. The court would be greatly inclined not to grant temporary injunction if it would amount to breach of the established principles and procedures for disbursing money released from Ministry of Finance by Uganda Development Bank. The grant of the temporary injunction would prejudice the innocent beneficieries-1890 sugarcane farmers.

Therefore, the first requirement for the grant of a temporary injunction fails since there is no prima facie case or there are no triable issues which this application raises that would necessitate this court to interrogate in the main cause.

## *Preliminary Considerations*

The 1st and 2nd respondent's counsel has raised preliminary points of law on the propriety of the application and specifically suing of the 1st and 2nd respondent offices instead of Uganda Development Corporation.

The 1st and 2nd respondent's counsel submitted that their clients are improper parties to the proceedings and they cannot be sued in their own names. The funds sought by the applicant are not held by the 1st and 2nd respondents but rather by Uganda Development Corporation. Granting such application or application for Judicial review would result in a very absurd scenario where the 1st and 2nd respondents are obliged to halt or make payments arising from the supply of Sugarcane to Atiak Sugar Factory which falls squarely within UDC's statutory mandate as well as its contractual mandate as the implementing agreement.

Secondly, the respondent's counsel contended that whereas the case involves various public bodies and public officials, the application seeks to enforce private contractual rights that arose when the applicant loaned money to the 4th respondent. Therefore, the applicant wants to enforce the terms of a loan agreement that it entered with the 4th respondent.

The applicant's counsel submitted that the Ministry or Uganda Development Corporation as a body has not refused to pay the applicant her money, it is the 1st and 2nd respondent who have refused to comply with the Ministerial directive.

The applicant's counsel further contended that the role played by the applicant here is a governmental one and the payment in issue is by of a grant from the state. This ceases to be a private contractual arrangement but a public private partnership. This is not a matter of purely private law but over 80% a public arrangement.

## *Analysis*

The applicant has indeed sued two offices to wit; *The Chairman Board of Directors, Uganda Development Corporation* and *The Executive Director, Uganda Development Corporation.* The applicant's reason for this decision to sue the two offices only is set out in his submissions; *it is the 1st and 2nd respondent who have refused to comply with the Ministerial directive.*

Uganda Development Corporation is established by Uganda Development Corporation Act of 2016 which gives the Corporation the capacity to sue and be sued in its name under section 2(2).

The applicant alleges that it's the two offices which refused to pay money to them but there is evidence on court record to support this assertion. This is public body which operates and is run through the Board which is headed the Chairman. The nature of the decision made in respect of payments to be effected cannot be made by the two office holders in absence of the entire board.

Liability of office holders in judicial review must be things done in bad faith which may infer personal liability. It would be wrong to add office holders merely because the party wants to intimidate them or coerce them to act. The 1st and 2nd respondent were acting in accordance with the policy guidelines on disbursing of funds and as directed by the Ministry of Finance, Planning and Economic Development. No liability would be imputed for any actions or things done in proper execution of their statutory mandate.

This application was incompetent or improper to be brought against the two offices instead of Uganda Development Corporation which was mandated to effect payment upon directives of Ministry of Finance, Planning and Economic Development.

Under rule 7A of the Judicature (Judicial Review) (Amendment) Rules 2019, it is the primary duty of the court to establish firstly, whether the application is amenable for judicial review.

Rule 7A provides for the factors to consider in handling application for judicial review.

- *(1)The court shall, in considering an application for judicial review, satisfy itself of the following* - *a) That the application is amenable for judicial review;* - *b) That the aggrieved person has exhausted the existing remedies available within a public body or under the law; and* - *c) The matter involves an administrative public official.*

The matter before court concerns private rights which arose from a loan advanced by the applicant to the 4th respondent. *"That in the course of the implementation of the agreement, a meeting with the 3rd respondent and the applicant's representatives was held at Uganda Development Corporation's offices. During that meeting, the applicant stated that it wanted to advance money to the 4th respondent to enable the 4th respondent harvest and transport sugarcane to Atiak Sugar Factory.*

*That the applicant's representatives were informed that Uganda Development Corporation could not be privy to the proposed loan facility, and that such discussions should be held outside the UDC offices. Consequently, Uganda Development Corporation did not participate in the transactions under which the applicant loaned UGX 172, 900,800/= to the 4th respondent."*

It is settled law in Uganda, as was held in *High Court Misc. Cause No. 0003/2016: Arua Kubala Park Operators And Market Vendors' Cooperative Society Limited v Arua Municipal Council***,** which quoted with approval *R v East Berkshire Health Authority Ex Parte Walsh [1984] 3 WLR 818***,** that the remedy of judicial review is only available where the issue is of breach of "public law", and not of breach of a "private law" obligation. To bring an action for judicial review, it is a requirement that the right sought to be protected is not of a personal and individual nature but a public one enjoyed by the public at large.

According to of the text **Public Law in East Africa, Ssekaana Musa, 2009, LawAfrica Publishing**, the learned author states, at page 36, that 2 (two) things must be established for judicial review to be available, 1) the body under challenge must be a public body whose activities can be controlled by judicial review, 2) *the subject matter of the challenge must involve claims based on public law principles, not the enforcement of private law rights*.

Public law is the system which enforces the proper performance by public bodies of the duties which they owe the public. On the other hand, private law is concerned with enforcement of personal rights of persons, human or juridical, such as those emanating under property, contract, duty of care under tort and mainly regulates relations between private persons: *Arua Kubala Park Operators And Market Vendors' Cooperative Society Limited v Arua Municipal Council. (supra)*

In *Arua Kubala Park Operators And Market Vendors' Cooperative Society Limited v Arua Municipal Council (Supra)***, the Honourable Mr. Justice Stephen Mubiru** held that where a relationship is regulated by the law of contract, like in the instant Application, administrative law remedies should generally not be available. The Learned Judge further held that it is important that parties are held to their contractual obligations through ordinary suits and not by invoking public law remedies. A party should not take advantage of public law simply because it contracted with a public body, and thereby obtain an advantage in the enforcement of that contract, that would otherwise not be available against a non-public body or private person.

The subject matter of the claim being pursued in the judicial review application must involve strictly matters of public law not private law. Public bodies (like private bodies) may enter into contracts or commit torts. Individuals may only be seeking to enforce essentially private law rights. Judicial review is not available to enforce purely private law rights. Contractual and commercial obligations are enforceable by ordinary action and not by judicial review. *See R v Lord Chancellor ex p. Hubbit and Saunders [1993] C. O. D 326.*

The applicant cannot enforce a loan agreement through judicial review since the 1st and 2nd respondents or Uganda Development Corporation were not privy to the loan facility and it is purely a private affair between the applicant and the 4th respondent. The applicant can use other means to recover their advanced loan and not judicial review.

The application for temporary injunction fails and equally the main application/cause is not competently before the court and both are dismissed with costs.

I so Order

*Ssekaana Musa Judge 17 th May 2024*