Jamal & 2 Others v Uganda Oxygen Limited & 2 Others (Civil Application 13 of 1997) [1997] UGSC 17 (9 September 1997)

### IN THE SUPREME COURT OF UGANDA

### AT MENGO

# (CORAM: ODOKI JSC, ODER JSC & KAROKORA JSC)

## CIVIL APPLICATION NO. 13 1997

#### **BETWEEN**

SALIM JAMAL SHABIR ABJI $\ldots$ APPLICANTS ALNOOR JAMAL )

AND

UGANDA OXYGEN LIMITED OXYCO HOLDINGS LIMITED ... RESPONDENTS B. E. SHAMJI

> (Application for correction of the judgement and orders of the Supreme Court of Uganda (Odoki JSC, Oder JSC & Karokora JSC) dated 14 April 1997 in Civil Appeal No.64 of 1996)

#### RULING OF THE COURT

This application has been brought under Rules 1(3), 34 and 41 of the Rules of the Supreme Court for the following orders:

- That this Honourable Court be pleased to recall 1. its judgement dated 14 April 1997. - That the words "and of the suit in the court $\overline{2}$ below" appearing in the last paragraph at p.41 of the lead judgement of Hon. Justice Oder be deleted. - That an order be made giving the applicants at $3.$ least partial costs of the appeal. - 4. That orders (c) and (d) appearing in the lead judgement of Hon. Justice Oder be deleted and substituted with a slip order for a retrial de novo.

- The grounds of the application are stated as follows: The appeal having succeeded in part, the court could not have intended to deny the Appellants costs altogether. - The court having ordered the amendment of the $(b)$ plaint and a fresh trial, could not have intended to award costs to the Respondents in the lower court before the retrial. - The court having found it necessary to order the $(c)$ amendment of the plaint and adding Uganda Oxygen Ltd as 4th defendant could not have intended to make findings of fraud and awards of special damages before such amendment and addition of Uganda Oxygen Ltd. - The court having found it necessary to order $(d)$ amendment of the plaint and adding Uganda Oxygen Ltd as 4th defendant could not have intended to limit the trial to any particular issues. - In the absence of a finding by the trial judge $(e)$ that all the three appellants had committed fraud and in the absence of a cross appeal the court could not have intended to make an order that all the three appellants had committed fraud. - The orders $(c)$ and $(d)$ in the said judgment have $(f)$ occasioned gross miscarriage of justice to the applicants/appellants.

The background to this application is that the applicants were sued by the respondents in the High Court claiming various declarations, injunction and an account of funds misappropriated by the applicants.

$\overline{2}$

**THE REAL PROPERTY AND INCOME.**

Shamji (applicant 3) and Alnoor Jamal (Respondent 3) were business partners with vast and substantial interests in business concerns in Uganda, Kenya, Tanzania, Zimbabwe and the United Kingdom. One of the concerns was Oxyco Holding Ltd (Respondent 2) a company registered in Kenya. The company was formed for the sole purpose of acquiring a Ugandan Company, namely Uganda Oxygen Ltd (respondent 1) from its former shareholder East African Oxygen Ltd. Shamji and Alnoor Jamal were the only shareholders of Oxyco Holding Ltd; of which the former appears to have been the majority shareholder and chairman of the Board of Directors. Almoor Jamal and Salim Jamal appear to have been directors of Uganda Oxygen Ltd. Alnoor held one share and Oxyco Holding Co. 149,999 shares in Uganda Oxygen Ltd. A dispute arose as to who were the rightful directors of Uganda Oxygen Ltd.

All the shares of Uganda Oxygen Ltd were transferred to Oxyco Holding Ltd and Alnoor Jamal. Shamji provided the whole of the purchase price in Kenya out of joint funds with Alnoor. Alnoor was made in charge of management of both companies. However, Salim Jamal, a brother of Alnoor and director of Oxyco Holding Ltd, appears to have taken over the management of Uganda Oxygen Ltd as soon as it was taken over by Oxyco Holding Co. Salim continued to manage Uganda Oxygen Ltd until trouble erupted between Shamji and Alnoor over their joint business interests.

In 1992, Shamji began interesting himself in the affairs of Uganda Oxygen Ltd and found some problems within the company. He discovered that Salim and Shabir had held themselves out as directors of Uganda Oxygen Ltd whereas they had not been duly appointed. He also found that between 1992 and 1993 all the applicants had jointly caused massive financial and other losses to Uganda Oxygen Ltd through various frauds. An audit check revealed that the applicants had caused the company loss of Shs 230, 929, 355/-.

$\overline{3}$

He then filed a suit against the Jamal brothers and one Shabir Abji for declaration, damages and injunction. The trial judge held that the two companies could not maintain the action because they did not have authority to file the suit in the name of the companies. He held that Shamji could maintain a derivative action against the applicants to protect his interests in the company. He held that Uganda Oxygen had lost various sums of money as a result of fraudulent designs of Applicant No 1. He finally held that Uganda Oxygen Ltd should have been added as a nominal defendant and he ordered in his judgment that it be so ordered. This is what he said,

"It would appear to me that the proper course of action would have been for the plaintiff No.3 to sue not only the 3 defendants but the companies they controlled that is plaintiff No 1 and 2, at least as was done in C. S. No.5451 of 1993 in the High Court of Kenya, except that in that suit Uganda Oxygen is not a party. This enables a court in making its final orders to make orders that bind all the parties involved avoiding a multiplicity of actions and bringing at an end litigation covering substantially the same matters.

In the circumstances of this case, I am reluctantly constrained to (sic) unusual step. Using the inherent jurisdiction of this court I add Uganda Oxygen Ltd as the fourth defendant in this suit under Order 1 Rule 10(2) of the Civil Procedure Rules. I order defendant No 1 (one) to pay on account of the defendant No 1's fraudulent acts in the affairs of defendant No 4. Defendants No 1 and No 2 are hereby restrained from purporting to be Directors of Defendant No 4 at least, until a proper and valid appointment. The resolutions passed by defendants No 1 and No 2 and with any of them are void. The suit by plaintiff No 3 is therefore allowed with costs."

The applicants appealed to this court against the above decision on six grounds. Only one ground of appeal succeeded and the rest were dismissed. The fifth ground of appeal which was allowed was as follows:

$\mathcal{I}$

$"5.$ In the circumstances of this case the learned trial judge erred in law and fact when he substituted Plaintiff No 1 as defendant No 4 after striking it from suit and proceeded to deliver judgment."

This court held that while the trial judge was right in joining Uganda Oxygen Ltd as a fourth defendant under 0.1 rule $10(2)$ of the Civil Procedure Rules, he did so late in the proceedings and did not give parties any opportunity to do anything about the pleadings as required by the said rule. Order 1 rule $10(2)$ and $(4)$ provides,

"(:2) The court may at any stage of the proceedings either upon or without the application of either party and on such terms as may appear to the court to be just, order that the name of any party improperly joined whether as plaintiff or defendant be struck out and that the name of any person who ought to have been joined whether as plaintiff or defendant or whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all questions involved in the suit, be added.

$(3)$ . . .

(4) Where a defendant is added or substituted the plaintiff shall, unless the court otherwise directs, be amended in such manner as may be necessary and amended copies of the summons and of the plaint shall be served on the new defendant, and if the court thinks fit, on the original defendants."

In allowing ground 5, this court (per Oder JSC who wrote the leading judgement with which the other members of the court agreed) said,

"In view of the discretionary powers in rule $10(2)$ and (4) above, I think that the learned trial judge, after adding Uganda Oxygen Ltd as defendant, as he did, should have afforded an opportunity to the remaining plaintiff Shamji, to amend the plaint in the suit and to serve it on the new defendant, Uganda Oxygen Ltd and the others. This he did not do, and I think that by not so doing he did not exercise his discretion judicially. In that regard, with respect, there was a failure of justice, in my judgement.'

The learned Justice of the Supreme Court then made the final orders of the court as follows:

"In the result this appeal should partially succeed,<br>but the respondents should have $\frac{5}{6}$ of the costs of the<br>appeal and of the suit in the court below. The orders of the learned trial judge should be set aside and<br>substituted with the following:

$\mathsf{S}$

The plaint in the suit should be amended, $(a)$ indicating Shamji as the only plaintiff, and that he is suing as a shareholder and as a representative of the other shareholders of Uganda Oxygen Ltd.

$(b)$ The plaint in the suit should be amended by joining Uganda Oxygen Limited as the 4th defendant.

(c) The issue of fraud by the three appellants against Uganda Oxygen Ltd having been proved and not challenged in this appeal should not form an issue in the amended plaint.

The amended plaint should be restricted only $(d)$ to the issue of quantum of liability by the three appellants (as defendants) in favour of, and should pray for remedies to, Uganda Oxygen Ltd.

$(e)$ The amended plaint should be filed in court and served on all the four defendants within 21 days from the date hereof."

The applicants are seeking a correction of the order relating to costs and the orders contained in paragraphs (c) and $(d)$ .

The applicants rely on Rule $1(3)$ of the Supreme Court Rules 1996 which provides for the inherent power of the court to make such orders as may be necessary for achieving the ends of justice or to prevent abuse of the process of the court. They also rely on Rule 34 of the Rules of this Court which provides,

$"(1)$ A clerical or arithmetical mistake in any judgment of the court or any error arising in it from an accidental slip or omission may, at any time, whether before or after the judgment has been embodied in an order be corrected by the court, either of its own motion or on the application of any interested person so as to give effect to what was the intention of the court when judgment was given.

An order of the court may at any time be corrected $(2)$ by the court, either of its own motion or on the application of any interested person, if it does not correspond with the order or judgment it purports to embody or where the judgment has been corrected under subrule (1), with the judgment as so corrected." The above provisions have been considered in various decisions of this court as well as those of the former East African Court of Appeal namely, Vallabhdas Karsandas Raniga V. Mashukhlal Jivraj & Others [1965] E. A. 700, Lakhamshi Brothers Ltd V. R Raja & Sons [1966] E. A. 313, Zaituna Kawuma V. George Mwa Luwum, Supreme Court Civil Appeal No.3 of 1992 (unreported) and Adam Vassiliadis V. Libyan Arab (U) Bank for Foreign Trade and Development Ltd, Supreme Court Civil Application No.28 of 1992 (unreported).

In Adam Vassiliadis V. Libyan Arab (U) Bank for Foreign Trade and Development Ltd (supra), this court quoted with approval the statement of Newbold P in Lakhamshi Brothers Ltd V. R. Raja & Sons (supra) at p.314 which ably summarises the circumstances in which this court will act to apply the slip rule, as follows:

"Indeed there has been a multitude of decisions by this court, on what is known generally as the slip rule, in which the inherent jurisdiction of the court to recall a judgment in order to give effect to its manifest intention has been held to exist. The circumstances however, of the exercise of any such jurisdiction are very clearly circumscribed. Broadly these circumstances are where the court is asked in the application. subsequent to its judgment to give effect<br>to the intention of the court when it gave its judgment or to give effect to what clearly would have been the intention of the court had the matter not inadvertently been omitted. I would here refer to the words of this court given in the Raniga Case (1965) EA at p.703 ) as follows.

'A court, will of course, only apply the slip rule where it is is fully satisfied that it is giving effect to the intention of the court at the time when judgment was given or, in the case of a matter where it is satisfied, beyond doubt, as to the order which it would have made had the matter been brought to its attention.'

These are the circumstances in which this court will exercise its jurisdiction and recall its judgment, that is, only in order to give effect to what clearly would have been its intention had there not been an omission in relation to the particular matter."

The first order sought to be corrected is the order for costs. It is submitted that the words "and of the suit in the court below" appearing in the last paragraph of the judgement of Oder JSC be deleted because the Court could not have intended to award costs to to respondents in the court below after ordering a retrial. It is contended that had counsel for the applicants brought this matter to the attention of the court, it would have ordered each party to bear its own costs or that the costs be in the cause, or abide the result of the retrial. On the other hand learned counsel for the respondents submitted that the applicants are labouring under a misconception that his court ordered a retrial of the suit, whereas what the court did was to order an amendment of the plaint to put the record straight without reopening decided issues.

We agree with the submission of counsel for the applicants that the Court ordered a re-hearing of the suit, although it is clear that the court did not order a re-trial of issues which had been proved like fraud. What the court did was to order a correction of the record in the lower court by allowing the parties to amend pleadings as directed and the lower court taking any subsequent proceedings before making the final order. In effect the court was merely to carry out the omitted procedure but not required to retry any substantive issue. The result is that the hearing of the suit in the lower court has not been concluded and therefore the costs there must abide the outcome of the re-hearing. The order of this court granting costs in the · lower court was therefore an error arising from an accidental slip and did not give effect to the intention of the court. The proper order should have been that the costs of the suit in the lower court abide the outcome of the re-hearing.

The second purported error or slip is the complaint that there is no order for the partial costs to the appellant/applicants on appeal.

This complaint is caused by a failure to interpret correctly the order of the court. The applicants succeeded on one ground of appeal. The order recognises this fact when it provides that the respondents should recover $\frac{5}{6}$ of the costs of the appeal (and of the suit in the court below). In effect this means that the applicants are entitled to $1/6$ of the costs of the appeal as well as in the court below. There is no error to correct here.

The next errors the applicants desires to be corrected are the orders in (c) and (d) of the order of this court. The order in paragraph (c) reads,

"The issue of fraud by the three appellants against Uganda Oxygen Ltd having been proved and not challenged in this appeal should not form an issue in the amended plaint."

It was contended on behalf of the applicants that fraud was challenged in ground 6 of appeal. But as learned counsel for the respondents submitted, what was raised in ground 6 was a technicality that the trial judge erred in law and fact when he awarded plaintiff No 1 (UOL) special damages and made findings of fraud which were based on pleadings that had been struck off. This was not an attack on the evidence of fraud that was adduced at the trial and accepted by the trial judge. The striking off of the suit by the plaintiff No 1 (UOL) did not affect the substance of the pleadings as regards fraud. The learned judge made findings of fraud which were not challenged on appeal. For instance, the learned judge found as follows:

"... it has now been established that Defendant No 1 and agent of Defendant No 3 who was running Plaintiff No 1 was involved extensively in fraudulent acts<br>committed to the detriment of plaintiff No 1 and the derivative interest of Plaintiff No 2 in Plaintiff No 1" $\,$ $\,$

The learned judge held Defendant No 1 (applicant No 1) liable to Plaintiff No 1, (Uganda Oxygen Ltd) for the sum of Shs.193,500,000/-. He also found that Uganda oxygen Ltd had

$\overline{q}$

lost Shs 234,100,000/- and shs 65,000,000/- due to a fraudulent design of Defendant No 1 (applicant No 1). He concluded,

"I order Defendant No. 1 to pay to Defendant No 4 the sums herein adjudged as due to the Defendant No 4 on account of Defendant No 1's fraudulent acts in the<br>affairs of Defendant No 4."

These findings were upheld on appeal. We do not find any error or mistake worth correcting as contended by the applicants. The findings on fraud should not be reopened.

Counsel for the applicants submitted further that only Defendant No 1 had been adjudged liable to Uganda Oxygen Ltd, and not all defendants. The judgement of the lower court is not so explicit especially as Defendant No 1 was acting as agent of Defendant No 3. It should be noted that Defendant No 2 was together with Defendant No 1 restrained by injunction from purporting to act as Directors of Uganda Oxygen Ltd. That order should stand. We find no error worth correcting on this score.

However, we would clarify that the intention of the court in making the order in paragraph (d) was to restrict the scope of the proceedings in the lower court to any consequential matters that may arise as to apportionment of liability among the three applicants/appellants. The issue of liability had been settled and must not be reopened. We accordingly wish to clarify our orders in paragraph (c) and (d) by restating them as follows:

- "(c) The issue of fraud by the three appellants against Uganda Oxygen Ltd having been proved and affirmed on appeal should not form an issue in the proceedings in the court below. - (d) The proceedings in the lower court should be restricted only to the issue of quantum of liability by the three appellants (as defendants) in favour of Uganda Oxygen Ltd."

It appears to us that the use of the words "amended plaint" in the orders did not adequately convey the intention of the court, and to this limited extent it is a slip which the court finds it necessary to correct in order to clarify the import of the orders.

In conclusion we wish to point out that we do not expect a retrial of the issues in the lower court. The purpose of our orders was to enable the lower court to carry out the necessary procedure as required by the law, and thereafter make the necessary orders in accordance with the findings of the lower court except where modifications are necessary to bring them in conformity with our judgment in the appeal, and this ruling.

In the result this application is allowed only in part. The words "and of the suit in the court below" appearing in the judgment of Oder JSC, are deleted and substituted with the words and the costs in the lower court shall abide the outcome of the re-hearing.<sup>ii</sup> Paragraphs (c) and (d) of the orders in the judgment of Oder JSC are deleted and substituted with the following:

- The issue of fraud by the three appellants $"(c)$ against Uganda Oxygen Ltd having been proved and affirmed on appeal should not form an issue in the proceedings below. - $(d)$ The proceedings in the lower court should be<br>restricted only to the issue of quantum of liability by the three appellants (as defendants) in favour of Uganda Oxygen Ltd."

The applicants will have half of the costs of this application.

$\tilde{\chi}_{\rm{out}}(\tilde{\chi}_{\rm{in}}) = \tilde{\chi}_{\rm{out}}(\tilde{\chi}_{\rm{in}})$

$\sim 11$

$12$ 9th<br>19.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1. Dated Down J. ODOKI OF SUPREME $\sim$ $\frac{1}{2}$ $\frac{1}{2}$ Nev. B. Babigunina for te Applicants $.9.97.$ No of peara de la Resp. Mr. Emma manama cont clerk. M. B. Babijunion: Its. cov-set for the Mage. was served as evidenced by Ct: Rulined as lineated.