Mpalanyi Henry and Another v Kakumba Bernard Tamale and Others (Miscellaneous Application No. 0581 of 2024) [2025] UGHC 410 (30 May 2025)

### **THE REPUBLIC OF UGANDA**

### **IN THE HIGH COURT OF UGANDA SITTING AT MUKONO**

### **MISCELLANEOUS APPLICATION No. 0581 OF 2024**

### **(Arising from Civil Suit No. 144 of 2019)**

| 5 | 1. | MPALANYI HENRY | } | | |---|----|----------------|---|------------------------------| | | 2. | MWEBE ANNET | } | …………………………………………… APPLICANTS |

### **VERSUS**

| 10 | 1.<br>KAKUMBA BERNARD TAMALE | } | | |----|-------------------------------------------|---|---------------| | | 2.<br>TAMALE RHONNIE KYERANYI | } | | | | 3.<br>NAKIGUDDE MARGARET | } | … RESPONDENTS | | | 4.<br>KIMERA DAVID | } | | | | 5.<br>SUGAR CORPORATION OF UGANDA LIMITED | } | | | | | | |

15 **Before: Hon Justice Stephen Mubiru.**

### **PROCEEDINGS**

| 22nd April, 2025. | | |-------------------|--| |-------------------|--|

# 10.02 am

## 20 Attendance

Ms. Akatwijuka Joan, Court Clerk.

Mr. Kalali Steven, Counsel for the applicants is in court.

The applicants are in court.

Mr. Bernard Mutyaba, Counsel for the 1st 2nd and 3rd respondents is not in court.

25 None of the respondents is in court

Mr. Musoke Arafat, Counsel for the 4th respondents is not in court.

The 4th respondents is not in court

Mr. Pope Ahinbisibwe, Counsel for the 5th respondents is in court.

There is no representative of the 5th respondent in Court.

### **Counsel for the applicant:**

The application concerns the deposit of trust funds on personal accounts of the administrators.

**Court;** the respondents are directed to open up a trust or estate bank account before the application

can be heard. In the meantime, hearing of the application is adjourned to 8 35 th May, 2025 at 9.30 am. Today's costs are in the cause.

…………………………….. Stephen Mubiru Judge 22nd April, 2025. 5 10.22 am.

7th May, 2025. 10.08 am Attendance

Ms. Akatwijuka Joan, Court Clerk.

- 10 Mr. Bagyeda Ivan with Mr. Kalali Steven Counsel for the applicants are in court. The applicants are in court. Mr. Bernard Mutyaba, Counsel for the 1st 2nd and 3rd respondents is in court. The 1st 2nd and 3rd respondents are in Court. Mr. Musoke Arafat, Counsel for the 4th respondents is in court. - The 4th 15 respondent is not in court

Mr. Pope Ahimbisibwe, Counsel for the 5th respondent is in court.

There is no officer of the 5th respondent in court.

# **Counsel for the 5th respondent:**

20 The process of opening the account is ongoing and will be concluded within a week. We pray for an adjournment.

## **Counsel for the applicant:**

The mode of distribution and placing the funds on personal accounts is what the controversy is all

25 about. This can be mediated and so we request for court annexed mediation.

**Court;** further hearing of the application is adjourned to 30th May, 2025 at 9.00 am. In the meantime, the matter is referred to the Deputy Registrar for assignment of a court accredited mediator. Today's costs are in the cause.

30 …………………………….. Stephen Mubiru Judge 22nd April, 2025. 10.20 am.

30th May, 2025. 9.18 am Attendance Ms. Akatwijuka Joan, Court Clerk. 5 Mr. Kalali Steven, Counsel for the applicants is in court. The applicants are in court. Mr. Moses Lubwama holding brief for Mr. Bernard Mutyaba, Counsel for the 1st 2nd and 3rd respondents is in court. The 1st 2nd and 3rd respondents are in Court. Mr. Musoke Arafat, Counsel for the 4th 10 respondents is not in court. The 4th respondent is not in court Mr. Moses Lubwama holding brief for Mr. Pope Ahimbisibwe, Counsel for the 5th respondent is in court. There is no officer of the 5th respondent in court.

### **Counsel for the applicant:**

The parties met on 23rd May, 2025 but failed to reach a compromise. The gist of the application is to set aside the consent of 26th November, 2024. There is collusion, fraud illegality and the fact that it was obtained contrary to the Court's policy. The 1st to 4th respondents are administrators of

- the estate. They were substituted as parties to civil suit 144 of 2017, whereupon the 5th 20 defendant admitted liability. It was agreed that sum of shs. 1,340,000,000/= was to be paid in settlement. We challenge the mode of execution. They availed their personal individual accounts and accounts of 3rd parties who are not beneficiaries of the estate to be paid monies. The beneficiaries who are applicants were never involved or informed. It is not in the best interests of the estate and the - 25 beneficiaries. It is exposing the estate to risk of loss of the funds. It is payment of arrears of ground rent over a number of years. It is perversion of the interest of the estate in preference to the private interest. Fraud is a dishonest act is proved by splitting the estate. There is illegality is an act prohibited by law. It was inequitable to transfer to the funds to their individual, personal accounts.

### **Counsel for the 1st 2nd and 3rd** 30 **respondents:**

The arrangement of splitting was for the benefit of the beneficiaries. It is in the best interests of the beneficiaries that some of the funds go to their attorneys. The written submissions of the 5th respondent should be adopted.

### *EX-TEMPORE RULING*

A consent Judgment is a judgment of the court in terms which have been contractually entered into by parties to the litigation, validated by Court under O.50 rule 2 and Order 25 Rule 6 of *The Civil*

5 *Procedure Rules* (see *Brooke Bond Liebeg (T) Ltd v. Mallya [1975] E. A 266*). A consent judgment once recorded or endorsed by the Court, becomes the judgment of the Court and binding upon the parties. It is however unique in that it is not a judgment of the Court delivered after hearing the parties. It is an agreement or contract between the parties. As such it can only be set aside for a reason which would enable the court to set aside or rescind on an agreement.

Historically, therefore, it was considered that a fresh action was necessary where a party sought to establish that a consent judgment was tainted by fraud or mistake (see *Jonesco v. Beard [1930] AC 298* and *de Lasala v. de Lasala [1980] AC 546*). The logic of this approach was that a fresh action would be required as the main proceedings were no longer extant, having been concluded, 15 and could not be revived by an application made within the proceedings. Fresh pleadings would be required setting out the allegation of fraud, mistake or non-disclosure and seeking the set aside of the order by way of relief and the matter would proceed to a trial of the allegations. However, in *Hirani v. Kassam [1952] EA 131,* followed in *Attorney General and another v. James Mark Kamoga and others, S. C. Civil Appeal No. 8 of 2004*, it was held, inter alia, that;

Prima facie, any order made in the presence and with the consent of counsel is binding on all the parties to the proceedings or an action, and it cannot be varied or discharged unless obtained by fraud or collusion, or by an agreement contrary to the policy of the court…. or if the consent was given without sufficient material facts, or in general for 25 a reason which would enable a court to set aside an agreement.... It is a well settled principle therefore that a consent decree has to be upheld unless vitiated by a reason that would enable Court to set aside an agreement such as fraud, Mistake, Misapprehension or Contravention of Court policy. The principle is on the premise that a consent decree is passed on terms of a new contract between the parties to the 30 Consent Judgment.

Similarly, in *Babigumira John and others v. Hoima Council [2001 – 2005] HCB* 116, it was held inter alia that a consent order can be set aside if it was given without sufficient material facts or in misapprehension or in ignorance of material facts or in general for a reason which would enable

the court to set aside such an agreement. In *Pavement Civil Works Ltd v. Andrew Kirungi, High Court Misc. Application No. 292 of 2002,* it was held that a consent Judgment and decree cannot be set aside by appeal but rather by a suit, or by an application for a review of the Judgment sought to be set aside. But that the more appropriate mode is by an application for review. The reasons 5 that would enable court to set aside a consent judgment are fraud, mistake, misapprehension or contravention of court policy.

In the instant application, the applicants advance a two pronged attack for seeking an order setting aside the consent judgment, in that; they as beneficiaries never consented to the terms of the 10 consent, and that the agreed mode of performance is not in the best interest of the estate and its beneficiaries. Tin deciding one way or the other, the Court will consider the extent to which the applicants are affected by the consent decree, the validity of the reasons provided for setting aside the consent decree, and whether setting aside the consent decree would violate public policy or cause undue prejudice to other parties.

### i. *Locus standi* in applications for setting aside consent decrees.

A person who has the right to bring an application for review is one who has suffered a legal grievance, and this includes a third party as long as he or she can prove that he or she suffered a

- 20 legal grievance by virtue of the decision he or she seeks to review. A person suffers a legal grievance if the Judgment given is against him or her or affects his or her interest (see *Yusufu v. Nokrach [1971] EA 104*; *Re Nakivubo Chemists (U) Ltd [1979] HCB 12*; *Mohammed Allibhai v*. *W. E. Bukenya and The Departed Asians Property Custodian Board, S. C. Civil Appeal No. 56 of 1996*; *Tullow Uganda Ltd and Tullow Uganda Operators v. Jackson Wabyona and Uganda* - 25 *Revenue Authority, H. C. Misc. Application No. 0197 of 2017*; and *Busoga Growers Co-operative Union Ltd versus Nsamba & Sons Ltd, H. C. Misc. Application No. 123 of 2000*).

Ordinarily third parties cannot apply to set aside a consent judgment or decree unless they have a direct interest in the case and can demonstrate how the decree impacts them. In general, a party

30 must be directly affected by the consent decree to have *locus standi*. This means they must demonstrate a legal interest in the subject matter of the decree, or that their rights or interests are

prejudiced by its implementation. Third parties with significant interests affected by consent decrees can legitimately seek their annulment. These are individuals or entities whose rights or obligations are directly impacted by such decree, even though they weren't formally involved as parties in the suit. This could include property owners, creditors, or beneficiaries of a contract 5 affected by the decree. The applicants must demonstrate that they are being harmed or negatively impacted by the consent decree. This could be due to the decree affecting their property, financial

interests, or other legal rights.

Applicants must show they are either a party to the consent decree or have a direct interest in the 10 matter settled by the consent decree. The applicants in this case are beneficiaries of the estate of the late Mr. Emmanuel Tamale, the 5th respondent's lessor. The subject matter of the consent decree is "compensation, unpaid ground rent, mesne profit interest and/or any damages" for the 5th respondent's use and occupation of land comprised ion LRV 118 Folio 2 Plot 1 situate on Kyaggwe Block 269 Plot 1 at Wabikokoma. The1st, 2nd, 3rd and 4th respondents, are administrators of the estate the late Mr. Emmanuel Tamale. It is in that capacity that they sued the 5th 15 respondent, negotiated and signed the impugned consent judgment. I find that by virtue of being beneficiaries of the estate of the late Mr. Emmanuel Tamale, although the applicants are not parties to the consent decree, they have a direct interest in the matter settled by the consent decree. They are entitled to a share in the proceeds of that decree, whose terms may negatively impact that interest.

### ii. The grounds of annulment consent decrees on application by third parties.

Parties to civil proceedings are free to amicably settle a dispute and consent to a judgement, decree or order being entered. The parties may do so orally before a judicial officer who then records the 25 consent or they may do so in writing, affix their signatures and place the same for endorsement by the Court. A consent judgment cannot be set aside on account of one of the parties having a change of heart. It can only be done if there are mistakes as to fact or law, fraud committed by the other party, or any mistake made at the time when the Consent Judgment was entered; or where it was obtained by fraud, collusion or in a manner contrary to the Court policy.

A consent judgement is an agreement of the parties which can be rescinded on terms similar to grounds that govern the rescission of a contract which include mistake, misrepresentation, fraud or generally absence of freedom to contract or absence of consent of the parties against whom the contract is intended to be enforced. Some of the common law grounds for setting aside a contract

5 include; duress, undue influence, misrepresentation, mistake and *non-est-factum*. The grounds for vitiating a consent judgement must relate to the conduct of the parties during the execution of the same. A defect in the original agreement or dealings between the parties that led to the filing of the suit will not vitiate a consent judgement that is properly entered upon the agreement of the parties. The alleged vitiating factor must relate to the execution of the consent.

The applicants' case is that they were never consulted nor otherwise involved by the 1st, 2nd, 3rd and 4th respondents, as administrators of the estate of the late Mr. Emmanuel Tamale, when they were negotiating and concluding the terms of the impugned consent judgment. As a result, the 1st, 2nd, 3rd and 4th respondents agreed to terms that subjected the interests of the estate to their private 15 individual interests when they agreed to split the proceeds into four instalments payable to the private personal bank accounts and those of advocates involved in the negotiation. It is the applicants' argument that this conduct was dishonest and imperiled their interest as beneficiaries, and that of the estate in general.

- 20 Section 279 of *The Succession Act* requires an administrator to collect, with reasonable diligence, the property of the deceased, and the debts that were due to him or her at the time of his or her death. The administrator must locate all of the deceased's assets. This includes bank accounts, property, investments, personal belongings, and digital assets. Once located, these assets must be secured to prevent loss or damage. It is thus trite that the duties of an administrator include ensuring 25 the property is secured and any related debts/taxes are paid, the property is maintained or sold under the laws of intestacy, and proceeds are distributed to beneficiaries (see *Moshe Mujogya and three others* v. *Smart Bwango and two others, H. C. Civil Suit No. 037 of 2018*). After the administrators as fiduciaries satisfy priority claims against the estate and settle the deceased's unpaid debts and assuming sufficient monies remain in the residuary estate, it is then that they are - 30 required to distribute it among the beneficiaries in accordance with the laws of intestacy.

Administrators have a fiduciary duty to manage an estate and distribute it according to the laws of intestacy, acting in the best interests of the beneficiaries. This duty requires them to be honest, fair, and diligent in managing the estate. They must avoid conflicts of interest and cannot benefit personally from their position, other than receiving any compensation specified for their services. 5 It allows them to pay debts and distribute assets according to laws of intestacy, without mingling

personal funds. This necessitates the opening up of an estate account.

Opening an estate account is a critical first step for an administrator. It ensures that all financial transactions related to the estate are properly managed and documented. An estate account is a 10 temporary bank account that holds the financial assets of a deceased person's estate. Its main purpose is to consolidate the deceased's financial resources, ensuring that all transactions related to the estate are handled efficiently and securely. An estate account brings all the financial assets of a deceased person into one place. This consolidation simplifies the process of managing and distributing the estate. This ensures that the funds are used appropriately and reduces the risk of 15 fraud or mismanagement. Creditors can make claims against the estate, and the administrator uses the account to pay these claims. Once all debts and expenses are paid, the administrator can distribute the remaining assets to the beneficiaries. This distribution is done according to the laws of intestacy. The estate account makes it easier to track and manage these distributions, ensuring

that each beneficiary receives their rightful share.

In the instant case, the 1st, 2nd, 3rd and 4th respondents failed in their duty to open up an estate account for the collection of the financial assets of the estate. As a result, when they signed the consent on 21st May, 2024 they directed the 5th respondent to pay various instalments to their private personal accounts and those of their named advocates. Splitting the lump sum payment by the 5th 25 respondent into multiple instalments is, *prima facie*, not an act of collection and preservation of that financial asset. It exposes the fund to the risk of being intermingled with their personal funds. It makes it much more cumbersome to track and manage payments and distributions made out of the fund. It seriously undermines the obligation that each beneficiary receives their rightful share. The 1st, 2nd, 3rd and 4th respondents have not offered any reasonable justification for such an 30 imperious decision. The applicants have therefore demonstrated to the Court's satisfaction that they are harmed or negatively impacted by the consent judgment and decree.

### iii. Considerations of public policy or possible undue prejudice to other parties.

An administrator can be held personally financially liable for any loss resulting from a breach of their duty, even if the mistake was made in good faith, such as failure to identify, and correctly 5 distribute funds to the beneficiaries, including any missing beneficiaries or missing assets. An attempt at commingling personal assets with trust or estate assets constitutes a breach of trust. Administrators who commingle assets erode the credibility and trust beneficiaries have in their ability to manage the trust competently and ethically. It is necessary to obtain consent from beneficiaries before making significant financial decisions. This transparency helps prevent 10 potential conflicts of interest, such as that which is manifested herein, in the impugned consent judgment. Beneficiaries have the right to expect that estate assets will be managed responsibly and ethically. To protect the interests of beneficiaries and maintain the integrity of the estate, administrators must adhere to best practices, maintain clear separation of estate and personal funds, and seek professional guidance when necessary.

In the administration of estates of deceased persons, the administrator is responsible for managing the assets of the estate strictly for the benefit of the estate beneficiaries. Keeping estate assets separate from personal or other non-estate assets is crucial to maintain the estate's integrity and ensure that its objectives are met. Commingling can occur when an administrator deposits estate

- 20 funds into their personal bank account, uses estate property for personal purposes, or mixes estate investments with their own. In applying the legal principles outlined above to the present case, it is in the best interest of justice that the Consent Judgment is set aside. Setting it aside will not prejudice any discernible rights of other parties. On the other hand, maintaining the consent judgment, when it has a clear manifestation of potential conflict of interest detrimental to the - 25 applicants' interest and that of other beneficiaries, would be against this Court's policy and public interest. Consequently, the application succeeds. The consent judgment is hereby set aside with costs to the applicants.

…………………………….. Stephen Mubiru

30 Judge 30th May, 2025. 10.08 am.