Jack Wavamunno v Kai anderson & oers (Civil Suit No. 33 of 1996) [2002] UGCommC 12 (8 July 2002)
Full Case Text
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\mnaryLim1}{\info{\title THE REPUBLIC OF UGANDA }{\author Administrator}{\operator skivumbi}{\creatim\yr2010\mo3\dy12\hr10\min57}{\revtim\yr2010\mo4\dy12\hr12\min33}{\version3}{\edmins14}{\nofpages6}{\nofwords1980}{\nofchars9947}{\nofcharsws11904} {\vern32859}}{\*\xmlnstbl {\xmlns1 http://schemas.microsoft.com/office/word/2003/wordml}}\paperw12240\paperh15840\margl1440\margr1440\margt1440\margb1440\gutter0\ltrsect \widowctrl\ftnbj\aenddoc\trackmoves1\trackformatting1\donotembedsysfont0\relyonvml0\donotembedlingdata1\grfdocevents0\validatexml0\showplaceholdtext0\ignoremixedcontent0\saveinvalidxml0\showxmlerrors0\noxlattoyen \expshrtn\noultrlspc\dntblnsbdb\nospaceforul\formshade\horzdoc\dgmargin\dghspace180\dgvspace180\dghorigin1440\dgvorigin1440\dghshow1\dgvshow1 \jexpand\viewkind1\viewscale100\pgbrdrhead\pgbrdrfoot\splytwnine\ftnlytwnine\htmautsp\nolnhtadjtbl\useltbaln\alntblind\lytcalctblwd\lyttblrtgr\lnbrkrule\nobrkwrptbl\snaptogridincell\allowfieldendsel\wrppunct 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\ltrch\fcs0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 THE REPUBLIC OF UGANDA \line IN THE HIGH COURT OF UGANDA AT KAMPALA \line }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 (COMMERCIAL COURT) \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 HCCS No. 33 OF }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \insrsid1982055 1996 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 JACK WAVAMUNNO}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 \'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 PLAINTIFF \line VERSUS \line KAI ANDERSON & OTHERS }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 \'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85.. DEFENDANTS \par }\pard \ltrpar\s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid1982055 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 BEFORE: }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\insrsid9264436\charrsid1982055 THE HONOURABLE MR. JUSTICE JAMES OGOOLA }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\insrsid1982055 \par }\pard \ltrpar\s15\qc \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid1982055 {\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\ul\insrsid9264436\charrsid1982055 JUDGMENT}{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid1982055 \par }\pard \ltrpar\s15\qj \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid1982055 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Plaintiff and the 3rd Defendants are shareholders/directors in the 2rd Defendant }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055\charrsid1982055 Company}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 . Upon acquiring a loan of ECUs 100,000 from the European Development Fund (EDF), 2\rquote Defendant was appointed agent of Plaintiff. Thereupon, Plaintiff surrendered his La}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 nd Title on Plot 17 Kawuku to 2}{ \rtlch\fcs1 \af0 \ltrch\fcs0 \super\insrsid1982055\charrsid1982055 nd}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Defendant for use as security for the above EDF loan \emdash see Power of Attorney (Exhibit P.3). The above land title was mortgaged to UNITED ASSURANCE COMPANY for agreeing to guarantee the EDF loan. Subsequently, Plaintiff wishing to relinquish his shares in the 2}{\rtlch\fcs1 \af0 \ltrch\fcs0 \super\insrsid1982055\charrsid1982055 nd}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Defendant }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055\charrsid1982055 Company}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 signed an Agreement (Exh. P.6) on 28/06/95 to sell his 60 shares to 1st and }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 3rd}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Defendants. According to Plaintiff, the 1st and 3Id Defendants agreed to pay for the 60 shares within 7 days of the date of the Agreement; to redeem Plaintiff\rquote s title deed on the Kawuku land within 28 days of the date of the Agreement; and, in the event of 2nd Defendant\rquote s failure to repay the EDF loan, then each shareholder undertook to repay a }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 pro rata }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 share of the loan. \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Plaintiff contends that Defendants have failed to honour the redemption of his land title and that they also failed to repay the EDF loan \emdash whereupon UNITED ASSURANCE COMPANY sold the suit land in 1996. Plaintiff therefore prays for payment of the market value of his land as well as for general damage}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 s, and the costs of this suit. \par }\pard \ltrpar\s15\qj \li0\ri0\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid10179129 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 At the commencement of the suit, the parti}{ \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 es agreed the following facts: \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (a) that Plaintiff was indeed the registere}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 d proprietor of the suit land; \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (b) that the suit land was sold off by UNITED ASSURANCE COMPANY un}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 der the terms of the mortgage. \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10179129 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 In addition to the above agreed facts, the parties als}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 o agreed the following issues: \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (1) whether there was a share transfer contract between Plaintiff and the 1st and 3rd }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 Defendants; \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (2) whether the share transfer was subject to the Memorandum of Understanding amongst the shareholders of the 2 Defendant (Exhibit R5); }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (3) whether Defendants breached the Share Transfer Agreement, if so whether such breach occasioned }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 loss of Plaintiff\rquote s suit land; \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (4) whether 2nd Defendant owed Plaintiff a duty of care under the terms of the Power of Attorney (Exhibit P.3) [to ensure repayment of the EDF loan and redemption of Plaintiffs land]; if so, whether there was a breach of th at duty, and whether such breach occasioned loss of }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 Plaintiff\rquote s suit property; and \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (5) whether Plaintiff is en}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 titled to the remedies sought. \par }\pard \ltrpar\s15\qj \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid1982055 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 In the course of the hearings, Plaintiff called one witness (PWI) \emdash the Plaintiff himself (Mr. Jack Wavamunno). Defendants elected to call no }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 witness}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055\charrsid1982055 (}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 es) at all. Neither did they formally tender into evidence any documents at all. Moreover, while the }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 1}{ \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 st }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 and 2nd}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Defendants filed a joint written statement of defence, the 3rd Defendant filed no defence at all. [In the premises, Court hereby enters judgment for the Plaintif}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 f against the 3 Defendant for }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 failure to file a defence, contra}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 ry to 09 r7 of the Civil Procedure }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Rules.] }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 I will now deal with the agreed issues in the order}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 in which they were presented. \par }\pard \ltrpar\s15\qj \li0\ri0\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid10179129 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 By their wr itten submissions, Defendants contend (as regards the first agreed issue) that the }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid10179129 Share Transfer Agreement was le}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055\charrsid10179129 gally defective in as much as: \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid10179129 (i) the Agreement was neither }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \insrsid9264436\charrsid10179129 signed }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid10179129 nor }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \insrsid9264436\charrsid10179129 sealed (as }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid10179129 required by law) by the two companies: M}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055\charrsid10179129 /S CAPRICORN, and M/S FISHTEC; \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid10179129 (ii) there was no company resolution by M/S CAPRICORN (as required by law); authorising the }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055\charrsid10179129 sale of its shares in FISHTEC;
\par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid10179129 (iii) there was no company resolution by M/S FISHTEC (as required by law) authorising that company to buy shares from both the Pl}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055\charrsid10179129 aintiff and M/S CAPRICORN; and \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid10179129 (iv) there was no company resolution by M/S CAPRICORN authorising Plaintiff to contr}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055\charrsid10179129 act on behalf of that company}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 . \par }\pard \ltrpar\s15\qj \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid1982055 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 In light of all the defects alleged above, Defendants submitted that the Share Transfer Agreement was illegal, null and void and, therefore, not binding on }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 1st }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 and }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 3rd }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Defendants \emdash see Wright & }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 Sons Ltd v. Romford Borough Council [1957] IQB 431; }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 also see Halsbury\rquote s Laws }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 of England }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 (3r}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 d }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 Edn) Vol. 6, p.427. }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid1982055 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 In my view, this case stands or falls on the determination of the first agreed issue: namely, whether the Share Transfer Agreement is valid or invalid. Primarily, Defendants\rquote contention is that the Agreement was neither signed nor sealed by the two companies involved \emdash CAPRICORN an}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 d FISHTEC, as required by law. \par }\pard \ltrpar\s15\qj \li0\ri0\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid10179129 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 I am satisfied that indeed the Sha}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 re Transfer Agreement (Exhibit }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 P.6) was neither signed nor sealed by either CAPRI}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 CORN or }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 FISHTEC as they should have done by requirement of law. This defect is self-evident on the face of the Agreement itself. Additionally, however, the Plaintiff himself (as PW1) testified, in cross-examination, to the effect that he signed the Agreement on his own behalf and on behalf of CAPRICORN \emdash but that there was no Company stamp and no company seal on that Agreement. Sec ondly, PWI, who purported to have signed for CAPRICORN (presumably his own Company), had no authorisation from that company to contract on its behalf. There is no company resolution by CAPRICORN to that effect. \line In addition to all the above defects submitted by the Defendants, it is also quite evident that the purported sale and transfer of shares in this case did not satisfy a veritable number of the Company\rquote s own Articles of Association (Exhibit P.1). Chief among these are the following: \line (a) Regulation }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 5 }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 \emdash }{ \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 which forbids the Company\rquote s funds from being employed to}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 purchase the Company\rquote s shares }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (contravention of which is punishable by a stiff fine under sectio}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 n 56(2) of the Companies Act); \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (b) }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid9264436\charrsid10179129 Regulation 6 }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \b\i\insrsid9264436\charrsid10179129 \emdash }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 which vests in the Company\rquote s Directors the authority to \'93allot or}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 otherwise dispose of shares\'94; \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (c) }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 Regulation 18 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 \emdash which requires share}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 transfers to be \'93in writing\'94; \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (d) }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 Regulation 19 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 \emdash which requires the share transferor and transferee to }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\insrsid9264436\charrsid1982055 execute }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 the transfer instrument; \line (e) }{\rtlch\fcs1 \af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 Regulation }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 20 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 \emdash which forbids any share transfer \'93 unless and until the right of pre-emption\'94 has been exhausted; }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (f) }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 Regulation 21 }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 \emdash which requires a shareholder desiring to sell/transfer any shares, to first give an advance notice of his intention to the Company\rquote s Directors; which notice then constitutes the Company\rquote s Board of Directors as his agent for the sale of the shares at a price to be agreed upon between}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 the seller and the Directors. \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10179129 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 In the instant case, there is no evidence at all \emdash let alone any indication \emdash to the ef fect that the requirements of the above Articles of Association were satisfied. In the result, the purported sale and transfer of shar}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 es must be held to be invalid. \par }\pard \ltrpar\s15\qj \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid1982055 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 I am fortified in this holding by the}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 authority of Wright & Son Ltd }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 v. Romford Borough }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Council }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 (supra). }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 In that case, an agreement though in writing and signed was, nonetheless, held to be non-binding on the grounds that it was not}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 sealed. GODDARD CJ held that: \par }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 \'93I cannot agree that [Section 266 of the Local Government Act, 1933] affects the age-long \line requirement of the common law as to the necessity of a seal to bind}{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid1982055 a corporation. Had Parliament }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 intended to make so drastic an alteration in the law it would surely ha}{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid1982055 ve so provided in clear terms. \par }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 I can find no words}{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid1982055 entitling me to say that if a }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 corporation does comply with their standing orders the seal is no longer }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid1982055\charrsid1982055 necessary}{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 either to bind them or to confer contractual rights upon them.\'94 }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid1982055 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 The underlying reason for this \'93age-long\'94 common law rule, is to afford immunity to corporations to the end that\'94 a corporation was not bound unless their contracts were under seal \'94 \emdash see p.433 of Wright\rquote s case }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 (supra). }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid1982055 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Having held as I have done on the first issue (that the Share Transfer Agreement was invalid and non-binding), it follows }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 ipso facto }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 that (t he second and third agreed issues are also answered in the negative (i.e. the purported share transfer could not be subject to the Memorandum of Understanding amongst the shareholders of the 2nd Defendant; nor could Defendants breach the }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 invalid }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 Share Transfer Agreement). \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 As regards the second set of agreed issues, however, the position is vastly different. These are issues No. 4 and No. 5, to the effect of whether 2 Defendant owed Plaintiff a duty of care under the Power of Attorney (Exhibit P3) to ensure repayment of the EDF loan and, consequently, redemption of Plaintiffs\rquote . Kawuku land \emdash and, if so, whether breach of that duty by 2 Defendant \line occasioned loss of Plaintiffs property. It is at once evident that this issue is separate and distinct from the f irst issue (dealing with sale and transfer of shares). The underlying documents to this second set of issues (i.e. the Power of Attorney, the EDF loan agreement, and the Mortgage Deed) are separate and distinct from the documents underlying the first set of issues (i.e. Share Transfer Agreement). Also the intentions of the parties as between each set of issues is separate and distinct \emdash in the first issue, the parties intended to divest their shares in the 2\rquote Defendant company; while in the second issue, the parties intended to access a loan facility for use in the operations of the }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \insrsid1982055 2n}{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 d }{ \rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Defendant. In view of all these factors, I am inclined to treat the second set of issues on a very different footing from the one I tr}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10179129 eated the first set of issues. \par }\pard \ltrpar\s15\ql \li0\ri0\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid10179129 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 It is qu ite clear in my mind that, thanks to Plaintiffs offer of his Kawuku land as a mortgage, the 2}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 nd}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Defendant ended up enjoying the benefits of the EDF loan, to the tune of ECUs 100,000. In the course of the scheduling conference of this suit, all the parties to the suit agreed expressly}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 and without any reservations: \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (i) that Plaintiff was indeed the registere}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 d proprietor of the suit land; \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (ii) that the suit land was mortgaged for purposes of the}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 2}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10179129 nd}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 Defendant\rquote s operations; and \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (iii) that UNITED ASSURANCE COMPANY sold off that mortgaged property un}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 der the terms of the mortgage. \par }\pard \ltrpar\s15\qj \li0\ri0\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid10179129 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10179129 \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 The terms of the mortgage required, }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid1982055 inter a}{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 l}{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid1982055 i}{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 a, }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 repayment of the loan by }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 2nd }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Defendant. 2 Defendant obviously breached that requirement. Similarly, the Power of Attorney authorising }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 2nd }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Defendant to mortgage Plaintiffs suit land required the }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 2nd }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Defendant to repay the EDF loan in accordance with the terms of the mortgage. 2 Defendant\rquote s failure to honour that obligation constituted a breach of its duty under the Power of Attorney to repay the loan and, thereby, to redeem Plaintiff\rquote s mortgaged property. That failure on the part of the }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 2n}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 d Defendant to repay the loan resulted directly in the sale of the mortgaged property. In my considered view, the responsibility for that loss redounds directly to the 2nd Defendant\rquote s failure. 2nd Defendant must compensate for that loss. However, owing to the unchallenged understanding reached by all the parties}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 (see Memorandum of Agreement: }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Exhibit P5) under which each shareholder (in the 2nd Defendant company) undertook to pay a }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 pro rata }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 share of the EDF loan (in the event that 2\rquote Defendant failed to repay that loan), the Plaintiff himself and his company CAPRICORN, must meet 40% and 20%, respectively, of }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 the loss of his suit property. \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Accordingly, judgment is hereby entered }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid10179129 for the Plaintiff against the 2nd}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 and 3rd Defe}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 ndants, jointly and severally: \par }\pard \ltrpar\s15\qj \li720\ri0\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\ipgp1\pararsid10179129 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (a}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055\charrsid1982055 ) in}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 the amount of 40% of shs.81m/- (the agreed market value of the suit p}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 roperty at the material time); \par }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 (b) interest on the above decretal amount at the rate of }{\rtlch\fcs1 \ai\af0 \ltrch\fcs0 \i\insrsid9264436\charrsid1982055 19% }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 p.a. from the date of filing this suit, to today\rquote s date of judgment; and, thereafter, at the Court rate on the total amount in (a) and (b) abo}{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 ve, until payment in full; and \par (c) the costs of this suit. \par }\pard \ltrpar\s15\qj \li0\ri0\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid10179129 {\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid10179129 \par }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid9264436\charrsid1982055 Ordered accordingly. }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \b\insrsid1982055 \par }\pard \ltrpar\s15\qc \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid1982055 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 James Ogoola \line }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\insrsid9264436\charrsid1982055 JUDGE }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 \line 09/07/02 \par }\pard \ltrpar\s15\qj \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid1982055 {\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\insrsid9264436\charrsid1982055 DELIVERED IN OPEN COURT, BEFORE: }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 \par }\pard \ltrpar\s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid1982055 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 Oscar Kihika, Esq \emdash Counsel for Plaintiff \line J. M. Egetu \emdash }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid1982055 Court Clerk \par }\pard \ltrpar\s15\qc \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid1982055 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 James Ogoola \line }{\rtlch\fcs1 \af0 \ltrch\fcs0 \ul\insrsid9264436\charrsid1982055 JUDGE }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 \line }{\rtlch\fcs1 \ab\af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 09/07/02 \line }{\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 \par }\pard\plain \ltrpar\qj \li0\ri0\sl360\slmult1\widctlpar\wrapdefault\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1982055 \rtlch\fcs1 \af0\afs24\alang1025 \ltrch\fcs0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\rtlch\fcs1 \af0 \ltrch\fcs0 \insrsid9264436\charrsid1982055 \par }{\*\themedata 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