Mss Xsabo Power Limited v Uganda Registration Services Bureau and Mercy K. Kainobwiso (Miscellaneous Application No. 41 of 2024) [2024] UGHC 1285 (15 July 2024)

Full Case Text

# THE REPUBLIC OF UGANDA

### IN THE HIGH COURT OF UGANDA AT MPIGI

### **MISCELLANEOUS APPLICATION NO. 41 OF 2024**

(Arising from Miscellaneous Application No. 39 of 2024)

(Arising from Miscellaneous Application No. 40 of 2024)

(Arising from Miscellaneous Application No. 04 of 2024)

........... APPLICANT MSS XSABO POWER LIMITED....................................

### **VERSUS**

1. UGANDA REGISTRATION SERVICES BUREAU

2. MERCY K. KAINOBWISO.................................... $\Omega$

(Registrar General/Official Receiver)

# BEFORE: HIS LORDSHIP HON. JUSTICE OYUKO ANTHONY OJOK

#### Ruling

#### Brief background: 15

It is the applicant's case that it is a Ugandan Company operating and owning a 20 MW pilot solar PV power park in Kabulasoke, Gomba District. It allotted 96 shares of UGX 1,000,000/ $=$ each to Great Lakes Energy Company N. V. pursuant to an investment agreement, a shareholder's agreement and a call on shares option agreement. However, Great Lakes Energy Company N. V. refused to pay for the shares despite a call on them thereby forfeiting these shares. That it was found out that Great Lakes Energy Company N. V had defrauded the applicant close to USD 6.5million in a fraudulent consultancy agreement that never was. The applicant thus revoked the Great Lakes Energy Company N. V shareholding.

$\left( -\right) _{k}$

$\mathsf{S}$

The Great Lakes Energy Company N. V. challenged the applicant's decision vide Company Petition No. 5 of 2020 filed with the Registrar of Companies. The Assistant Registrar of Companies, Solomon Muliisa, heard the matter, received by statutory declarations, cross-examination, re-examination and the parties filed written submissions before him. In a ruling dated the 8th of November, 2024, which was duly delivered to the parties, the Assistant Registrar of Companies dismissed the petition.

On the 13th of November, 2024, in a letter dated the 12th November, 2024, the applicant's lawyers received a communication from the Registrar General communicating her willingness to recall the decision of Solomon Muliisa and that the parties would be notified of a second decision once ready.

$\mathsf{S}$

On 15th November, 2024, the applicant got an administrative interim order from this Honourable court maintaining the status quo, lasting up to the end of 18th November, 2024 and the same was served onto the respondents.

On the same day, the applicant also served onto the respondents, the motion in 10 Miscellaneous Application No. 40 of 2024, praying for an interim injunction.

On the 18th November, 2024 at 9:00am, the respondents were in court pursuant to an effective service and summarily agreed to a consent injunctive order until the final determination of the main cause.

However, a second ruling written by the $2^{nd}$ respondent was delivered on the 18th November, 2024 at 9:12am despite there being an injunctive order maintaining the status quo.

It is the respondent's case on the other hand that upon submission of the ruling in Company Petition No. 5 of 2020 by the Assistant Registrar of Companies for clearance, the 2nd respondent advised the Assistant Registrar of Companies to review the awards from the London Court of Arbitration and all documents available on record in order to ensure that the question of payment for shares was well evaluated. However, contrary to the directive of the $2^{nd}$ respondent, the Assistant Registrar went ahead and issued what he had presented as a draft ruling on 8th November, 2024.

That the said action of the Assistant Registrar of Companies prompted the 30 Registrar General/Registrar of Companies to recall the ruling and communicated this decision to the parties in a letter dated 12th November, 2024. Resultantly, the Registrar General/Registrar of Companies took over the matter, relied on the

pleadings, evidence and submissions of the parties on record and issued a ruling on 15th November, 2024.

On 18th November, 2024, the respondents learnt that on 15th November, 2024, this Honourable court issued an exparte Administrative interim order directing $\mathsf{S}$ URSB and Registrar General/Official Received to maintain status quo and stop the implementation of the decision to recall the ruling made by the Assistant Registrar of Companies on 8th November, 2024 in Company Petition No. 5 of 2020 until the hearing of the interim Application on 18th November, 2024.

Further, on 19th November, 2024, the respondents learnt that on 18thNovember, 2024, this honourable court endorsed a consent interim order against the respondents vide Miscellaneous Application No. 40 of 2024 (MSS Xsabo Power Limited v. Uganda Registration Services Bureau and Registrar General/Official Receiver) in the same terms as the Administrative Exparte Interim Order until the hearing and determination of the Judicial Review Application Vide Miscellaneous Cause No. 04 of 2024.

The applicant in this case maintains that this court issued injunctive orders. These were brought to the knowledge of the respondents who willingly and 20 intentionally chose to disrespect these clear and unambiguous orders without justification. Hence, the instant application for contempt against the respondents.

# The application:

- This application was brought by Notice of Motion under Sections 14(2)(b) and 25 33 of the Judicature Act, Section 98 of the Civil Procedure Act, Order 52 Rules 1,2 and 3 of the Civil Procedure Rules against the respondents seeking orders that; - a. A declaration that the $2^{nd}$ ruling which was delivered by the $2^{nd}$ respondent on the 18th of November, in Company Petition No. 5 of 2020, is in contempt of the court orders in Miscellaneous Applications No. 39 and 40 of 2024. - b. An order that the respondents should purge themselves of the contempt. - c. An order that the 2nd respondent pays a fine of UGX 500,000,000/= or be committed to civil prison for contempt.

d. Costs of the application be provided.

The application is supported by an affidavit sworn by Bernard Okello, the General Manager of the applicant and the grounds briefly are that;

- a. The applicant allotted 96 shares of UGX 1,000,000/ $=$ each to Great Lakes Energy Company N. V. pursuant to an investment agreement, a shareholders' agreement, and a call on shares option agreement. - b. Great Lakes Energy Company N. V failed to pay for the value of the shares allotted to it. - c. Great Lakes Energy Company N. V. failed to pay for the value of the shares allotted to it. - d. The applicant made a call on shares which Great Lakes Energy Company N. V did not comply with. - e. The applicant forfeited the 96 shares and re-allotted them. - f. Great Lakes Energy Company N. V. challenged the applicant's decision vide Company Petition No. 5 of 2020 before the Registrar of Companies. - g. The Assistant Registrar of Companies of the 1st respondent (Muliisa Solomon) heard the matter wherein, evidence was adduced by statutory declarations, cross-examination and re-examination of the parties' witnesses, - h. In a ruling dated 8th November, 2024, which was duly delivered to the parties, the Assistant Registrar of companies dismissed Great Lakes Energy Company N. V.'s petition. - i. In a letter dated 12th November, 2024 the 2nd respondent communicated her decision to recall the Assistant Registrar's decision and informed the parties that they will be notified of a final decision (another decision) once it is ready. - j. The impugned decision dated 12th November, 2024 is marred by illegality, procedural impropriety, irrationality and the applicant applied for judicial review in this court vide Misc. Cause No. 04 of 2024. - k. On the 15th November, the applicant applied for and obtained an administrative interim order from this honourable court, vide Misc. Application No. 40 of 2024, maintaining the status quo and restraining the respondents from implementing their decision to recall the ruling made by the Assistant Registrar of Companies, reopening the proceedings or making a new decision in the same company petition until the hearing and final determination of the application for an interim order which was scheduled for 18th November, 2024 at 9:00am.

$\mathsf{S}$

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- 1. On the same day 15th November, 2024, the applicant duly served the respondents, with the administrative interim order and application in H. C. M. A No. 40 of 2024 for an interim injunction. - m. The respondents responded to the effective service, attended court on the 18th of November, 2024 at 9:00 am and the parties summarily entered into a consent interim injunctive order until the hearing and final determination of Miscellaneous Cause No. 04 of 2024. - n. The court orders of the injunction are very clear and unequivocal on what should not be done by the respondents. - o. During the lifetime of the orders of injunction and in total violation of the orders of injunction, on the 18th of November, 2024 at 9:12am the respondents delivered the second ruling written by the $2^{nd}$ respondent. - p. The second ruling was delivered with the respondents' full knowledge of the existence of a court injunctive order maintaining the status quo and was issued in willful disobedience of the aforesaid court orders. - q. On the 19th of November, 2024, the respondents physically delivered to the applicant's lawyer a letter expressly stating that they had enforced the second ruling which was delivered on the 18th of November, 2024 at 9:12am in the glaring presence of an injunction maintaining the status quo.

An additional affidavit in support of the application was filed on the 10th of December, 2024 sworn by Egesa Ronald Leonard an expert software engineer, cybersecurity and forensic expert, techpreneur, and consultant who was hired by the applicant to analyze the email communication allegedly sent by Ntale Mustapher to the email address of the applicant's lawyers at Makada & Partners Advocates and Solicitors.

The respondents on the other hand adopted and relied on the affidavits of Mustapher Ntale and Stella Muheki whose grounds are as follows;

> a. That the 2nd respondent made her ruling on 15th November, 2024 and the said ruling was implemented on the same day.

b. The $2^{nd}$ respondent's ruling was communicated to the parties in an email dated 15th November, 2024 at 11:07 am and 11:54am by the Commissioner Business Registration.

$\mathsf{S}$

C. At the time the $2^{nd}$ respondent's ruling was made, the exparte Administrative interim order in question had not yet been served upon the respondents.

d. The respondents had no knowledge of the existence of the exparte Administrative interim order, in question.

e. Stella Muheki lacked kr.owledge of the material facts of the matter at the time she signed the consent order dated 18th November, 2024.

f. The respondents are not in contempt of any court order as alleged by the applicant.

$\mathsf{S}$

#### Representation:

Mumpenje Andrew appeared for the applicant while Counsel Allan Mukama Senior State Attorney appeared for the respondents. Both parties filed their written submissions.

#### 15

#### Issues for determination:

1. Whether the respondents are in contempt of court orders?

2. What remedies are available to the parties?

#### The law: 20

The Black's Law Dictionary, 9th Edition at Page 360 defines contempt of court as; conduct that defies the authority or dignity of a court or legislature.

And, civil contempt as failure to obey a court order that was issued for another party's benefit while criminal contempt is defined as an act that obstructs justice or attacks the integrity of a court.

The case of Prof. Fredrick E. Ssempebwa and others v. Attorney General, Civil Application No. 05 of 2019, lies down the four considerations court must take into account to grant an application for contempt as follows;

a. There was an order issued by court;

![](_page_5_Picture_17.jpeg)

- b. The Order was served or brought to the notice of the alleged contemnor; - c. There was non-compliance with the order by the respondents; - d. The non-compliance was willful and malafide.

#### Resolution of issues: $\overline{5}$

The first two conditions are discussed jointly;

# a. Existence of a court order:

# b. The order was served or brought to the notice of the alleged contemnor:

It was submitted for the applicant that an administrative order was issued in $\overline{0}$ favour of the applicant on the 15th November, 2024 against the respondents. It was served onto the respondents on the same day together with Miscellaneous Application No. 40 of 2024. And, to prove that service was effective, on the 18th November, 2024 at 9:00 am Stella Muheki was in court, fully gowned on behalf of the respondents and agreed to the issuing of a consent injunctive order. 15

Counsel for the respondents did not contest the existence of the exparte interim administrative order which was issued on the 15th November, 2024. He went on to submit that the said order was served onto the respondents via an email 15th November, 2024 at 8:00pm when the public relations officers were out of office and could only be accessed on the next working day which was on Monday, 18th November, 2024. And indeed when the email was accessed by the public relations teams, it was sent to the registry at 1:37 pm on 18th November, 2024. Thus, the knowledge on the part of the respondents would be imputed if the order was served upon them and it is the duty of the applicant to prove that the service was effective. (See: Geoffrey Gatete v. William Kyobe, S. C. C. A No. 7 of $2005).$

Further, that the 2nd respondent made her ruling on the 15th November, 2024 and the said ruling was communicated to the parties on the same day at 11:07am and 11:54am. As such the applicant has failed to prove this element.

In the instant case the existence of the administrative interim order is not in dispute, however, what is in contention is whether the respondents were aware of the said order before issuance of the second ruling by the $2^{nd}$ respondent.

In the case of Chen Chan & 2 others v. Zhang Jun and another, Miscellaneous $\mathsf{S}$ Application No. 0822 of 2024, it was held that;

"The general principle is that a person cannot be held in contempt without knowledge of the court order. A party who knows of an order regardless of whether, in view of that pariy, the order is null or valid, regular or irregular cannot be permitted to disobey it by reason of what that party regards the order to be".

The respondents deny having had any knowledge of the Administrative interim order issued by this court on the 15th November, 2024 until the 18th November, 2024 at 1:37 pm when the same was accessed by their Public relations team.

It is however, inconceivable how Muheki Stella moved herself to attend court without the knowledge of her superiors of the Administrative interim order on the 18th November, 2024. I assume as an officer of the respondents she would first be assigned the case or delegated with clearance from her superiors to 20 represent them in court. Therefore, there was no way she could have come to court merely basing on the information relayed to her by a third party that there was a matter involving the respondents without checking with her superiors first for confirmation or instructions. I am therefore inclined to believe that by the time Stella Muheki came to court on the 18th November, 2024, the respondents 25 were well aware of the Administrative interim order that was issued on the 15th November, 2024.

The applicant in this case attached an affidavit of service that clearly shows that the respondents were served through email and WhatsApp when they could not be served physically on the 15th November, 2024. As such they were well aware of the court order even before Muheki Stella appeared in court on the 18th November, 2024 to represent them.

I accordingly find that in this case the administrative interim order was duly served or brought to the notice of the alleged contemnor/the respondents. The service was effective and that is why Stella Muheki appeared in court on the 18th November, 2024. The applicant has therefore proved this element to the satisfaction of this court.

## c. There was non-compliance with the order by the respondents:

Counsel for the applicant submitted that an order however erroneous or improper must be obeyed until set aside. (See: Emmanuel Kato v. Muyanja Mbabali, C. A. C. A No. 345 or 2018). That in the instant case on the 18th November, 2024 the respondents at 9:12am issued the impugned second decision via email. And, that it is not true that the said email was issued on the 15th November, 2024. Counsel argued that had it been issued on the 15th November, 2024 before the consent order, then Stella Muheki would have informed court about the same and not agreed to the consent injunctive order. That Stella acted as an agent and her actions bind the principal and besides even if she had no instructions, the administrative order was still running on the 18th November, 2024. As, such, the ruling delivered on the 18th November at 9:12 am was a nullity.

$\mathsf{S}$

Counsel also challenges and contests the fact that there was no $2nd$ ruling sent on the 15th November, 2024 as per the evidence of Egesa Ronald Leonard. Further, that whenever the validity and genuineness of a document is challenged, the evidential burden is on the party affirming its validity to tender in evidence to that effect. (See: John Bwiza v. Patrick Yowasi Kadama, C. A. C. A No. 35). Counsel noted that if indeed the ruling was delivered on the 15th November, 2024, then why did they send another ruling on the 18th November, 2024 at 9:12am?

Further, that Muheki stated in her affidavit that she got to know about the court date from a colleague. Counsel noted that before electronic evidence can be admitted, its authenticity must be established. (See: Beatrice Achola Odongo v. Nancy Wison Oryema, Miscellaneous Application No. 089 of 202). That in the instant case the document was doctored and one of the reasons is that WhatsApp does not abbreviate months when showing the date of the message as "16 Noy 2024" instead of "16 November 2024". 35

Additionally, that there is no way Muheki could receive the court order on 16th November, 2024 and not alert her superiors. Equally, there was no way she would inform the 1st respondent's driver to bring her to Mpigi from Kampala without telling her bosses why she needed the services of the driver. And that while in court, she informed court that she was the lawyer for the respondents and needed to be given time to respond to the applications.

Counsel concluded that Muheki Stella was sent by the respondents, she was their agent and her acts bind the: principals. And the second ruling and its enforcement came after she had entered into a consent injunctive order.

Counsel for the respondents on the other hand submitted that since the respondents did not know about the order, they could not comply with it and there was no willful or malafide disobedience.

$\overline{5}$

I have carefully considered the submissions for both parties in regard to this element and the gist is whether the second ruling was delivered before the Administrative order was issued which would confirm that the respondents did not disobey any court orders since the second ruling was issued earlier.

$25$

In the instant case Stella Muheki appeared for the respondents on the 18th November, 2024 as their lawyer. Whereas, she claims that, she came to court to ask for more time to respond to the applications since the respondents had not been served and this was done without the knowledge of the respondents, I am of the belief that this is actually not true. This also leaves me with many unanswered questions to wit; does this mean that officers of the respondents merely leave their duty stations and randomly go to court on their behalf just because they got wind of matters in court against their employer? Is there no systematic way of handling cases by the respondents or it is normal practice for their advocates go to court to represent them with no briefing? Is information or updates in regard to the cases they are handling relayed to their lawyers only when they come from court and have brought feedback as to what transpired?

Further, since Muheki Stella got the communication about the next court date as being 18th November, why would she come to court without being given a brief

of what the case was about? If at all the second ruling had been issued, then as the advocate entrusted by the respondents to appear on their behalf she ought to have been in the know and informed court accordingly. Unless the 2nd respondent had not yet delivered the second ruling and there was nothing to relay to Muheki.

Furthermore, Muheki Stella in her affidavit stated that she got to know about the Administrative Order from a third party who is a former workmate through a WhatsApp communication on the 16th November, 2024. A close examination of the WhatsApp communication shows that messages between the two were exchanged on the "16th Nov 2024" which is totally different from how dates are displayed on WhatsApp. Anyone who uses WhatsApp is able to tell that dates on the App are displayed with months of the year written in their full format and not abbreviations as seen in this case in the WhatsApp communication between Stella and Juliet Komugisa. This leads me to the conclusion that the said communicated was forged and did not actually take place to begin with. It was merely curated to back up the respondents' denials and untruthfulness.

$20$

$5$

The respondents also averred that the second ruling had already been issued by the time the Administrative order issued on the 15th November, 2024 was served upon them. However, upon close examination of annexture "J" attached to the affidavit in reply by Bernard Okello and annexture "D" attached to the affidavit of Mustapher Ntale; annexture "J" has a sign of a file folder attachment while annexture "D" has no such sign. This is a clear indication that there were no emails sent to the applicant on the 15th November, 2024 of the second ruling but rather were sent on the 18th November, 2024 while the Administrative order maintaining status quo was still valid. The respondents therefore issued the second on the 18th November, in total disobedience of the Administrative order dated 15th November, 2024 that run up to 18th November which they were aware of.

Given the above analysis, I find that the second ruling was issued by the 2nd respondent on the 18th November, 2024 as evidenced by Annexture marked "J" attached to the affidavit of Okello Baernard for the applicant and not 15th November as the respondents want this court to believe. Thus, there was no second ruling by the time Stella Muheki appeared in court on the 18th November, 2024 on behalf of the respondents.

The respondents therefore disobeyed the court order issued on the 15th November, 2024 while well aware of the same. The applicant has proved this element to the satisfaction of this court.

## d. The Non-compliance was willful and malafide: $\mathsf{S}$

Counsel for the applicant submitted that the order was unambiguous since Muheki was in court and willingly agree to a consent injunctive order. Thus, the respondents acted willfully and malafide when they went ahead to issue the second ruling shortly after the consent order.

In regard to the non-compliance being malafide, counsel added that the letter allegedly enforcing of the second ruling was served onto the applicant's lawyers on the 19th November, 2024. He argued that the letter was allegedly written on the 15th November, then why was it served four days later? That this means that the second ruling was delivered on the 18th November, 2024 at 9:12am after the consent order.

I agree with the submissions for the applicant in this regard, if indeed the second ruling was issued on the 15th November, 2024, why did the respondents have to wait and notify its enforcement onto the applicant on the 19th November, 2024? 20 It is only logical that the second decision was issued on the 18th November in disobedience of the Administrative interim court order and the letter communicating enforcement was then served on the applicant's lawyers on the 19th November, 2024. Otherwise, the letter communicating the second ruling's enforcement should have equally been served or communicated or emailed to the 25 applicant's lawyer on the 15th November, 2014, the date they claim it was issued. If as they allege that the ruling was truly sent by email on the 15th November, 2024, why then couldn't the letter of enforcement be sent the same way, but rather it had to wait for 19th November, 2024. This clearly shows that there was disobedience by the respondents of the court orders which was malafide and willful.

## Issue 2: Remedies available

Counsel for the applicant submitted that there was a court order, served and known by the respondents, which they malafide and willfully disobeyed yet its 35

contents were clear and unambiguous. Counsel prayed that court finds the respondents in contempt of its orders and offer the remedies prayed for in the application.

Counsel for the respondents on the other hand prayed that this court finds that $\mathsf{S}$ the respondents are not in contempt of any court orders.

In regard to costs counsel for respondents quoted Section 27(1) of the Civil Procedure Act which provides that;

"Subject to such conditions and limitations as may be prescribed and to the 10 provisions of any law for the time being in force, the costs of and incidental to all suits shall be in the discretion of the court or judge and the court or judge shall have full power to determine by whom and out of what property and to what extent those costs are to be paid, and to give all necessary directions for the purposes aforesaid." 15

That from the above provision, when it comes to costs, the Civil Procedure Act is subject to the provisions of any other written law for the time being in force and in that regard Section 288 of the Companies Act provides that;

"In all proceedings before the court under this Act, the costs of the Registrar 20 shall be in the discretion of the court, but the registrar shall not be ordered to pay the costs of any other of the parties."

Counsel argued that the proceedings before this court relate to the exercise of the respondent's mandate under the companies Act and invited court to exercise its 25 discretion in this application and award costs to the respondents.

The applicant in the instant case has proved all the elements that are required before court can grant an application for contempt of court as already discussed above. In the case of Stanbic Bank (U) Ltd and another v. The Commissioner General Uganda Revenue Authority, Miscellaneous Application No. 0042 of 2010, it was held that;

"Uganda has no equivalent of the contempt of court Act but disobedience to civil court orders is known and ought not to be allowed by courts especially in

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a case like this one where a statutory authority is found fo be consciously and intentionally disobeying a court order. Section 14(2)(B)() of the Judicature Act empowers this court fo exercise ifs jurisdiction in conformity with the common law and the doctrines of equity. And by virtue of section 14 (2)(c) of the same Act, where no express law or rule is applicable fo any mafter in issue before the High court the court shall exercise its discretion in conformity with the principles of justice, equity and good conscience. It is further provided by Section 14 (3) of the Judicature Act that the applied law, the common law and doctrines of equity shall be in force only in so far as the circumstances of Uganda and of ifs people permif, and subject fo such qualifications as circumstances may render necessary. If is my view that the dictates of justice and equity, as well as the circumstances of the people of Uganda today require me fo apply common law and the doctrines of equily in this maffer... Contempt of court is one such abuse of the court process.

The same case stated that;

"Civil contempt is punishable by way of committal fo civil prison or by way of Sequestration. If can also be punishable by way of fine or an injunction against the confemnor".

The 2nd respondent in this case, while well aware of the administrative order went ahead and issued the second order in total disobedience of the court order. The applicant prayed that the 2 respondent be fined UGX 500,000,000/ = or be committed in civil prison. However, it is my considered view that the 2nd respondent is not liable to any civil or criminal proceedings in her personal capacity for any action done by her in execution of her duties. And the Ist respondent being a government body, I find that fining it will only dent the taxi payers pocket. 1 therefore exercise my discretion and decline to fine the respondents in this case. However, acts of this nature should be avoided in the hence forth.

In regard to costs, while I am mindful of the provisions of the law cited for the respondents, I would like to note that the proceedings before this court are not company matters that would exempt the Registrar from costs. This court under

the provisions of Section 288 of the Companies Act will exercise its discretion in regard to costs and as implored by counsel for the respondents.

This application is hereby allowed, court having found that the respondents refused to obey the administrative interim order and went ahead and issued the second ruling. The application is allowed with the following terms;

- a. A declaration that the second ruling which was delivered by the 2nd respondent on the 18th of November, in Company Petition No. 5 of 2020, is in contempt of the court orders in Miscellaneous Applications No. 39 and 40 of 2024. - b. An order is hereby issued that the respondents should purge themselves of the contempt. - c. Costs of the application be provided by the respondents.

I so order. 15

Right of appeal if any explained.

**OYUKO ANTHONY OJOK** 20 JUDGE

15/07/2024