Legal Brains Trust (LBT) Limited v Basajjabalaba & 14 Others (Constitutional Application 3 of 2024) [2024] UGSC 35 (11 July 2024)

# THE REPUBLIC OF UGANDA

# THE SUPREME COURT OF UGANDA AT KAMPALA

(Coram: Owiny-Dollo, CJ; Ekirikubiinza, Tuhaise, Chibita, Madrama, Bamugemereire & Mugenyi, JJSC)

# **CONSTITUTIONAL APPLICATION NO. 3 OF 2024**

(ARISING FROM CONSTITUTIONAL APPEAL NO. 4 OF 2020)

<table>

LEGAL BRAINS TRUST (LBT) LTD **APPLICANT**

**VERSUS**

- 1. HASSAN BASAJJABALABA - 2. HABA GROUP (UGANDA) LTD - 3. VICTORIA INTERNATIONAL TRADING **COMPANY LTD** - 4. SHEILA INVESTMENTS LTD - YUDAYA INTERNATIONAL LTD - 6. FIRST MERCHANT INTERNATIONAL TRADING COMPANY LTD - 7. BANK OF UGANDA - 8. HON. SYDA BUMBA, MP - 9. HON. KIDDHU MAKUBUYA, MP - 10. TUMUSIIME MUTEBILE BETTY KYAKYO & MUTEBILE DAVID KYOMUKAMA (Administrators of Estate of Late PROF. EMMANUEL TUMUSIIME MUTEBILE - 11. UNITED BANK OF AFRICA (UGANDA) LTD - 12. I & M BANK (UGANDA) LTD - 13. BANK OF BARODA (UGANDA) LTD - 14. TROPICAL BANK (UGANDA) LTD - 15. THE ATTORNEY GENERAL OF UGANDA

**RESPONDENTS**

#### **RULING OF THE COURT**

### A. Factual Background

- 1. The Applicant filed *Constitutional Petition No. 4 of 2012* in the Constitutional Court challenging the legality of a series of contracts/leases that were in January 2021 executed by Victoria International Trading Company Limited, Sheila Investments Limited, Yudaya International Limited and First Merchant International Trading Company Limited ('the Third, Fourth, Fifth and Sixth Respondents'), on the one hand, and the then Kampala City Council (KCC), on the other hand. The impugned contractual arrangements pertained to the management of Nakasero, Nakivubo Shauri Yako, St. Balikuddembe and Nakawa Markets; as well as the Constitutional Square. - 2. Following the termination of those contracts/leases, the Third, Fourth, Fifth and Sixth Respondents sought compensation from KCC and the Government of Uganda, which compensation was supposedly effected through borrowings by the said respondents' sister company, Haba Group (Uganda) Limited ('the Second Respondent') on the strength of letters of comfort and guarantee issued by Bank of Uganda ('the Seventh Respondent') in favour of United Bank of Africa (Uganda) Limited, the then Orient Bank Limited (now renamed 'I & M Bank (Uganda) Limited'), Bank of Baroda (Uganda) Limited and Tropical Bank (Uganda) Limited ('the Eleventh, Twelfth, Thirteenth and Fourteenth Respondents'). - 3. The above contractual arrangements were challenged by the Applicant for purportedly having been executed without the approval of the office of the Attorney General ('the Fifteenth Respondent'), while the ensuing compensation for termination thereof is contested for having been fraudulent and illegal. - 4. The petition was by a 3:2 majority judgment decided in favour of the Applicant, whereupon Hassan Basajjabalaba ('the First Respondent') and the Second – Sixth Respondents lodged *Constitutional Appeal No. 4 of 2020* in this Court. The Applicant filed a Cross-Appeal in the matter raising ten grounds of appeal but did, in written submissions that were lodged in this Court on 24<sup>th</sup> September 2021, explicitly abandon

Ground 1 of the Cross Appeal. That Ground reads as follows: 'The learned majority justices of the Constitutional Court erred in law and fact when they failed to determine all the issues that required resolution by the Constitutional Court.'

- 5. All of the present respondents were cited as Cross-Respondents in that Cross-Appeal. With the exception of Bank of Uganda and Professor Emmanuel Tumusiime Mutebile (now deceased) ('the Seventh and Tenth Respondents), all the other Cross-Respondents had filed their written submissions in the Cross-Appeal by 29<sup>th</sup> September 2021, and the Applicant filed its submissions in rejoinder on 30<sup>th</sup> September 2021. The Applicant thereafter filed the present application on 27<sup>th</sup> February 2024. - 6. At the hearing of the Application, Messrs. Isaac Semakadde and Gawaya Tegulle represented the Applicant, while the First – Sixth Respondents were represented by Messrs. Mwesigwa Rukutana (SC), Caleb Alaka, Joseph Kyazze, Edgar Ayebazibwe and Kenneth Paul Kakande; the Seventh and Tenth Respondents were represented by Mr. Albert Byamugisha; the Eighth Respondent was represented by Mr. Joseph Matsiko and Ms. Barbara Musimenta; the Eleventh and Thirteenth Respondents were represented by Messrs. Dennis Wamala and Rushongoza Begumya, and the Twelfth Respondent was represented by Messrs. Andrew Kibaya and Allan Mark Lutaya. Ms. Imelda Adong, a Senior State Attorney, appeared for the Fifteenth Respondent.

#### **B.** Application

7. This Application seeks to substitute and/or clarify two of the parties to the crossappeal, to wit, the Tenth and Twelfth Cross-Respondents; as well as amend the notice of cross-appeal. It invokes rule 93 of the Judicature (Supreme Court Rules) Directions ('the Supreme Court Rules) for the substitution of the late Professor Tumusiime Mutebile with the administrators of his Estate, Mrs. Betty Kaakyo Tumusiime Mutebile and Mr. David Kyomukama Tumusiime Mutebile; and section 40(5) of the Companies Act, 2012 for reference to the Twelfth Cross-Appellant by its new name, I & M Bank (Uganda) Limited.

- 8. The Application additionally seeks leave of this Court to introduce two new grounds of appeal, and detailed particularisation of six of the decretal orders sought in the original cross-appeal. It is grounded in the proposition that the proposed amendments highlight matters for constitutional interpretation in relation to the Nakawa Market and the Central Bank's letters of comfort, both of which are purportedly matters that the Constitutional Court neglected to address with finality and fidelity to the law. - 9. It is supported by the affidavit of Mr. Ivan Sengendo, a director in the applicant company; the gist of which is that the Applicant's advocates filed the original notice of cross-appeal in so much haste that they had not sufficiently particularised the grounds of cross-appeal and corresponding remedies sought. That, in turn, is opined to have unduly restricted the Applicant's line of arguments. See paragraphs 7 and 8 of the affidavit in support of the Application. - 10. Conversely, the First Sixth and Eleventh Thirteenth Respondents filed affidavits in reply that essentially oppose the Application. The Eighth, Tenth and Fifteenth Respondents did not file affidavits in reply but did at the hearing raise points of law in opposition to the grant of the Application. - 11. It is the First Sixth Respondents' contention that the Application offends the rules governing the amendment of pleadings insofar as it seeks to re-introduce a ground of appeal that had been abandoned by the Applicant, as well as new constitutional provisions for interpretation. In the same vein, the Eleventh and Thirteenth Respondents contend that the Application was brought with undue delay after the filing of their submissions in the Cross-Appeal, is unjust and prejudicial to the defences raised in their submissions and, in any case, is unnecessary given that the original notice of cross-appeal was sufficient to address all the issues raised in the proposed amendment. It is further argued that the absence of an affidavit in rejoinder leaves all the matters of fact raised in the affidavits in reply in support of the Eleventh and Thirteenth Respondents' case uncontested and/ or admitted. - 12. The latter submission is echoed by the Twelfth Respondent, who additionally avers that the application to substitute Orient Bank Limited with I & M (Uganda) Limited is

superfluous given that section 38 of the Companies Act, 2012 sufficiently addresses situations where a company has changed its name. On the other hand, it is argued for the Tenth Applicant that the acts that are in issue on appeal were undertaken by the late Professor Mutebile in his official capacity as Governor of the Central Bank, a public office that ought not be represented by his personal Estate. Meanwhile, the Eighth and Fifteenth Respondents associate with the propositions advanced by the First – Sixth and Eleventh – Thirteenth Respondents, the Fifteenth Respondent additionally arguing that rule 82 of the Supreme Court Rules restricts appeals to this Court to challenges to lower courts' decisions and not matters in support thereof.

- 13. In a brief rejoinder to the foregoing submissions, Counsel for the Applicant reiterates that Professor Mutebile had been sued in his personal capacity for conduct considered ultra vires to the office of Governor of the Central Bank. - 14. After carefully considering the parties' respective pleadings and oral arguments, this Court reserved its decision in this matter for delivery today, Thursday 11<sup>th</sup> July 2024.

# C. Decision

- 15. Rule 32(5) of the Supreme Court Rules provides that 'the court may at the close of the hearing of an application or appeal give its decision but reserve its reasons.' We do hereby invoke that procedural rule to render our decision in this Application but reserve the detailed reasons therefor for delivery together with the judgment in Constitutional Appeal No. 4 of 2020. - 16. The Court makes the following findings. - $\mathbf{I}$ An employer is vicariously liable for the acts of its employees that are taken within the ordinary course of their employment. Therefore, given that the late Professor Mutebile undertook the acts complained in the exercise of his mandate as Governor of the Central Bank, his personal Estate cannot be held responsible for the impugned acts.

II. The substitution of Orient Bank Limited with its new name, 'I & M Bank (Uganda) Limited is provided for in section 40(5) of the Companies Act, 2012 which reads as follows:

> A change of name by a company under this section shall not affect any rights or obligations of the company or render defective any legal proceedings by or against the company, and any legal proceedings that might have been continued or commenced against it by its former name may be continued or commenced against it by its new name. *(our emphasis)*

- III. In Gaso Transport Services (Bus) Ltd v Martin Adala Obene (1990 1994) 1 EA 88 this Court laid down the following principles on amendments to pleadings: - (a) The amendment should not work injustice to the other side. An injury which can be compensated by the award of damages is not treated as an injustice. - (b) Multiplicity of pleadings should be avoided as far as possible and all amendments which avoid such multiplicity should be allowed. - (c) An application which is made *mala fide* should not be granted. - (d) No amendment should be allowed where it is expressly or impliedly prohibited by any law (on) 'limitation of action.' *(our emphasis)* - IV. An amendment to pleadings that is brought after submissions have been closed and with the intention of closing gaps in the pleading sought to be amended is, in our view, brought with undue delay, denotes bad faith and ought not to be allowed. To compound matters, the Applicant in this case seeks to revive a ground of appeal that it had abandoned, which further underscores the mala fide connotations of the application. The courts do also frown upon an application for amendment of pleadings that has the effect of raising a new cause of action and negating the opposite party's line of defence. See **Abdul** Karim Khan v Mohamed Roshan (1965) EA 289. - 17. Consequently, this Application substantially fails with the following orders: - I. The application to substitute Professor Emmanuel Tumusiime Mutebile, the Tenth Cross-Respondent in the Cross-Appeal in respect of *Constitutional* Appeal No. 4 of 2020, with Mrs. Betty Kaakyo Tumusiime Mutebile and Mr.

David Kyomukama Mutebile (the administrators of the late Professor Mutebile's Estate) is hereby disallowed.

ii. The application to replace Orient Bank Limited, the Twelfth Cross- Respondent in the Cross-Appeal inspect of *Constitutional Appeal No. 4 of 2020*, with its new name - 1-& M Bank (Uganda) Limited is allowed. The name of Orient Bank Limited is hereby substituted with its new name, I & M Bank (Uganda) Limited.

iii. The application for leave to amend the Notice of cross-Appeal in *Constitutional Appeal No.* 4 of 2020 is disallowed.

lv. Costs to be abide the cause.

It is so ordered.

Dated and delivered at Kampala this 11<sup>th</sup> day of July, 2024.

**Alfonse Chigamoy Owiny-Dollo**

**Chief Justice.**

L'Uscellemer

Prof. Lilian Tibatemwa Ekirikubiinza

Justice of the Supreme Court

**Percy Night Tuhaise** Justice of the Supreme Court.

$\mathcal{L}^{\bullet}$ $\overline{\mathcal{L}}$ **Mike Chibita**

**Justice of the Supreme Court**

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**Christopher Izama Madrama Justice of the Supreme Court**

Dr. Catherine Bamugemereire **Justice of the Supreme Court**

midingenj.

Monica Kalyegira Mugenyi **Justice of the Supreme Court**