Okello v Ejom (Civil Suit 54 of 2012) [2023] UGHC 424 (22 November 2023)

Full Case Text

# THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA

### **HOLDEN AT LIRA**

# CIVIL SUIT NO. 54 OF 2012

#### BISHOP OKELLO TOM IBRAHIM::::::::::::::::::::::::::::::::::::

#### **VERSUS**

#### EJOM LEONARD::::::::::::::::::::::::::::::::::::

### **BEFORE:HON. JUSTICE ALEX MACKAY AJIJI**

#### JUDGEMENT

The Plaintiff entered into partnership with the Respondent by a partnership deed dated 18th September 2000 to start a school in the name of Amach Modern Senior Secondary School. They agreed to contribute 50% each as startup capital with a nominal amount of Ugx. 1,000,000 each. The partners registered the school with the Ministry of Education. The partners further had an understanding that the Plaintiff provides direct financial contribution and the defendant being a trained teacher, pays his contribution in kind through providing teaching and administrative services to the partnership. The defendant became the school headmaster and director while the Plaintiff financed the project as a co-director and chairperson Board of Governors. The Plaintiff contributed a total of 2,006,000/- in cash and the defendant contributed nothing in cash since he could not afford it at the time.

The partnership took off well until 2011 when the Plaintiff approached the defendant to review the partnership performance and a partnership meeting was held on 4th July 2011. During the meeting the defendant became cagey and he denied the Plaintiff access to information and account on the performance of the partnership.

On the other hand, the defendant filed a written statement of defence and contended that there has never been any partnership deed as the so called Partnership deed and arrangement had never been executed, nor registered with the Registrar of Documents or Bureau of Registration of Documents in Uganda, the Ministry of Justice and Constitutional affairs contrary to the Registration of Documents Act, the Partnership Act, the Companies Act and the laws of Uganda therefore and therefore the same is null and void abinitio, unconscionable, untenable and un actionable under the laws of Uganda, bestowing no cause of action nor any locus standi to the Plaintiff.

At the scheduling conference, the following issues were framed for determination;

- 1. Whether there is a partnership between the Plaintiff and the defendant? - Whether the Plaintiff is entitled to a partnership account? $2.$ - 3. What remedies are available to the parties?

# ISSUE 1: Whether there is a partnership between the Plaintiff and the defendant?

The record of proceedings neither contains the submissions for the plaintiff nor for the defendant, this court will therefore make its decision based on the evidence adduced by the witnesses and the law.

PW1, Bishop Okello Tom in his witness statement testified that he and the defendant started a senior secondary school in the name of Amach Modern Senior Secondary in Amach Ocamonyang Parish in Lira District. They agreed to contribute one million each but the Plaintiff contributed 2,006,000/-. They made a partnership deed on 18th/09/2000 and ran the school together till 2003. Further that they started with a rented house and put up a temporal class room built by borrowed iron sheets from C' Mike Investment and it was the Plaintiff who secured the loan as a director but the defendant stood as a Head teacher so that the school pays the loan later and it was paid.

He further testified in cross examination that the school had not been registered as a business but had been registered in 2000 as a school with the Ministry of Education. He also testified that the amount 850,800/- was deposited by the defendant and that the joint bank account that was opened for the partnership was closed by the defendant in 2003. He later changed and stated that the account was closed in 2012.

He also testified that the defendant took all the profit, he didn't share any profit with the defendant. He said he did not share any profit with his partner then because he barred him away from the school so he would not share any profit with him. He stated that he was chairman and director of the school and as so his role was to visit the school once in a while.

PW1 stated that the first instalment he made was for renovation, the second instalment was 917,420/- which was written on Bishop's contribution, third was 855,000/- and fourth instalment was 150,500/- that was a contribution for examination materials he later stated that it was requirement for materials., there was another instalment, he needed to add the total. He said he totaled and it was amounting to 2,006,000/-.

PW1 testified that he nominated board of governors of Amach Secondary School and gave the names to the defendant. He gave instructions to the defendant as headmaster to submit the names of the board of governors, if it was not done then it was his own mistake because he had the names of the people that they nominated together. He believed that the list was not submitted and that was his complaint in the meeting of July 4th. He testified that it is not true that the school collapsed when the teachers and students ran away for their lives because of insurgency. He stated that they moved to town, the students moved to town and the teachers also moved to town.

PW2, Beatrice Acen testified that she came to know the defendant on 20th/01/2000 when he went to their home, he told her his name was Ejom Leonard and that he told her he had gone to see Bishop Tom Okello whom he worked with at Amach Modern Senior Secondary School which was in Ocamonyang Lira District. That the defendant said he came to collect money for renovating the school and she later asked him if he had got what he came for and he told her yes. She asked what he had given Ejom and he told her 300,000/- for renovation of the school buildings. She testified that in 2003 during the insurgency her husband told her that the school was moved from Ocamonyang to Corner Amach where they settled up to now.

PW3, Ouni David testified that the school was in Ocamonyang for two years, the third year there was insurgency and they ran to Lira and continued to Amach Corner and settled there. He stated that to his surprise Bishop Tom Okello told him that they were not going on well with Ejom Leonard. He told him that Ejom wants to run the school alone by force

$\overline{3}$

On the other hand, the defendant in his witness statement testified that he perceived the idea of starting a Senior Secondary School while a teacher at Uganda Martyrs Namugongo, St Joseph's Girls S. S. Nsambya and Kampala High School. Further, that he approached Akaki Alex and Okao Bosco to rent their semi-permanent houses located at Ocamonyang Trading centre for purposes of making them premises to start the secondary school. In the year 2000, he picked up the check list of requirements for licensing a school together with Application forms for permission to operate a new private secondary school from the Ministry of Education. He had known Tom Ibrahim Okello since 1998 as he used to visit his daughter Ejang Sarah, a student at St. Joseph's Girls S. S. Nsambya where he was a teacher. He approached the Plaintiff in Lira Town and requested for his support to start a private school, which he accepted and agreed to endorse all required documents and the defendant even proposed the name to him as Amach Modern Secondary School.

The defendant also testified that on the 18th/9/2000 he went to Twontoo & Co. Advocates and asked them to draft for him a partnership agreement between him and the Plaintiff which was a requirement in the checklist of the Ministry of Education. The partnership deed was drafted, signed by him and he later took it to the Plaintiff who also endorsed while at his home in Lira Town.

In cross examination, the defendant testified that he and the Plaintiff were tenants in the premises that were rented from Akaki Alex and Okao Bosco. He also stated that the P. O Box 641 on the Tenancy agreement belonged to the Plaintiff. He further testified that the Plaintiff endorsed documents on the checklist and a license was given for starting the school. He conceded that he took the application for to the Plaintiff because his signature was important and that partnership was required as on the checklist. The school had collapsed in Ocamonyang, the principal place of business. He opened the school and then put the company name. He could not call it Amach Modern Senior Secondary School Ltd before it was registered. This was corroborated by the documents marked DEhx7 and DEhx8, memorandum and articles of association and the certificate of incorporation of Amach Modern Senior Secondary School Ltd incorporated on the 22nd of March 2010.

DW2, Ocen Bosco testified that he was a teacher at Amach Modern Senior Secondary School Ltd located at Alit village, Adola Parish, Amach sub county, Erute south Lira. He started teaching at Amach Modern Senior Secondary School located at then Acan Pii village, Ocamonyang Parish, Amach subcounty, Erute south, Lira District as one of the pioneer teachers in 2001. He testified

that in 2002 life became very hard, coupled with internal insecurity within the neighborhood of Ocamonyang, due to several land wrangles, conflicts and disputes by the neighbours of the school which resulted into massive killings. There were serious insecurity from the LRA rebels in the area, who were mercilessly killing and abducting innocent people in the area in Amach sub-county and the entire District. He ran away from the school and learnt that no one had reported to the school and as such it had collapsed and even closed. In 2007 is when he was invited to go and teach at the new school at the new school which was started by Ejom Leonard, now located at Corner Amach village, Adola parish, Amach sub-county, Lira District. That by 2008, Ejom Leonard had bought land in Banya Parish and the school was shifted to a new site at Alit village, now Adola Parish, Amach sub-county, Lira District. He did not know Bishop Tom Okello and did not see him appear or step in the school from the time he started teaching at the school, up to the time of its closure and collapse due to insecurity.

DW3, Ogwal Abel testified that in third term of 2002 there were serious land disputes between the neighbours of the school which resulted into killing of about ten people which disturbed the peace of the school by scaring away students and some teachers. In the same year at around the same time there was serious national insecurity arising from insurgency and rebel activities of the LRA who were killing innocent people massively. He later learnt that the school was registered as private limited liability company by Ejom Leonard with the Registrar of Companies in Kampala and he knows that Amach Modern Senior Secondary School Limited belongs to Ejom Leonard, the Director and proprietor and not Bishop Tom Okello whom he had never seen at the school on any single day. He stated that he knows that Bishop Tom Ibrahim Okello owns a number of properties, personal and family businesses which he is running together with his family e.g. All Nations Christian Care, the Almond college, the human Technical college, a construction firm etc. and that Mr. Ejom is not claiming any shares in those Companies.

At the visit of locus in quo PW1 testified that they started the school in the name of Amach Modern Senior secondary school. He regretted the name LTD added on the certificate it is not under the registration they had earlier. The tenancy agreement was signed by the defendant on his behalf. He was even his headmaster. He disputed that they went to the 4th place in 2011. He stated that it was not true that he never participated they are the ones that built the block on the west with the girls dormitory. He had ever attended a meeting with the defendant in 2011. In cross examination he

testified that the school did not start there in 2010, it was in 2009 and they had only boys. He is the Director of Amach Modern Senior Secondary School. In re- examination he testified that the iron sheets were transferred from Amach corner to Amach modern (current place)

I have carefully considered the evidence adduced by all the witnesses and the law in regard to this issue.

The Partnerships Act provides for the definition of a partnership. It is instructive in determining whether a partnership subsists between the parties. Section 2 (1) of the Act provides thus,

"Subject to subsection (2), a partnership is the relationship between or among persons, not exceeding twenty in number, who carry on a business in common with a view of making profit."

In the case Walakira V Walusimbi Civil Suit No. 579 of 2012, Hon. Justice B. Kainamura cited with approval Bank of the North V Dabare1976 NCLR 448 (High Court of Kano) (see David J. Bakibinga Partnership law in Uganda pg. 37)

"The question of whether a partnership exists is one of mixed law and fact. The law is contained in ss. 1 and 2 of the Partnership Act, 1890 of the United Kingdom. The facts are the common business activities of the parties as provided by their words and actions including if one exists, a written partnership agreement"

According to Section 3 (d) (ii) and (iv) of the Partnership Act 2010, the existence of a partnership may be determined from any admissions by the members of the partnership and agreements or other documents, formal or otherwise which disclose the partnership relationship.

It is not disputed that the Plaintiff and defendant executed a partnership deed on the 18th of September 2000 marked PEhx1 in which both the plaintiff and the defendant were referred to as partners. The parties took steps in setting up the school they acquired a license for the school and according to the defendant, the plaintiff endorsed all documents required for this. The plaintiff tendered in court a tenancy agreement marked PExh2 where the school first resided and this was signed by Rt. Rev. Tom Okello (plaintiff) and Ejom Leonard (defendant). Furthermore, the application for permission to operate new private school, marked PExh4, under the declaration of nature of ownership, it was indicated as "partnership"

The partnership deed that was executed by the parties in 2000 contained a clause on dissolution. It stated as follows at pg. 4;

### ARTICLE IX

## DISSOLUTION AND MISCELLANEOUS

The partnership shall dissolve when and only when: -

- 1. The partners agree, or court orders or on orders of arbitrators. - 2. On retirement, death, bankruptcy, adjudication as a lunatic or becoming of unsound mind of any partners.

The dissolution clause in the partnership deed was instructive of how the relationship between the two parties could be dissolved. There was no evidence that any of the ways as mentioned above had occurred and led to the dissolution of the partnership.

The defendant contended in his written statement of defence that the Partnership deed and arrangement have never been executed, nor registered with the Registrar of Documents or Bureau of Registration of Documents in Uganda, the Ministry of Justice and Constitutional affairs contrary to the Registration of Documents Act, the Partnership Act, the Companies Act and the laws of Uganda. The plaintiff was cross examined on whether the business had been registered and he stated that it had not been registered as a business but as a school with the Ministry of Education.

## Section 4 (1) of the Partnership Act 2010 provides thus,

"A firm carrying on business in Uganda under a business name which does not consist of the true surnames of all partners who are individuals and the corporate names of all partners which are corporations without any addition other than the true first names of individual partners or initials of the first names; and the corporate names of all partners which are corporations, shall register its name under the Business Names Registration $Act.$ "

The above section sets a mandatory requirement for the registration of any firm carrying on business in Uganda that has a business name which does not consist of the true surnames of all the partners without addition other than the true first names of the partners. This was clearly not done by the parties in this case and is an offence.

Notwithstanding, in the case of Simba Properties Investment Company Limited and Anor. V Kirunda & 3 ors Miscellaneous Application no.671 of 2022, Hon. Justice Stephen Mubiru had this to say at pg. 14, which I agree to;

"A partnership is the result of a contract. It does not arise from status or operation of the $\alpha$ law. It is but a convenient name for an aggregate of individuals, and the right and duties recognized and imposed by law are those of the individual partners. The formation of a partnership requires a voluntary association of persons who then co-own the business and intend to conduct the business for profit. Persons can form a partnership by written or oral agreement. Its existence clearly does not depend on registration"

I find that the two parties had entered into a partnership evidenced by the partnership deed marked PExh1 signed by both the plaintiff and defendant. The plaintiff admitted that a partnership existed between the two of them and so did the defendant. Documents that aided in setting up the school, Amach Modern Senior Secondary school were also tendered in court. The defendant claimed that the school's principal place was in Ocamonyang and that school collapsed. It was the defendant's evidence that he started another school called Amach Modern Senior Secondary School in 2008 and incorporated it in 2010 as a company.

# **ISSUE 2: Whether the Plaintiff is entitled to a partnership account?**

The Plaintiff testified that after opening the school they opened an account but he realized that the defendant had abandoned that account and opened his own in the name of the school without the Plaintiff's consent therefore the defendant was operating the account without him in the name of the school. He also testified that he discovered that the defendant had registered the school Amach Modern Secondary School to be his own company partnering with his wife, and when he discovered he called the defendant for a meeting on the 4th of July 2011. PW1 further testified that he discovered that the defendant had acquired loans from the bank without him.

PW2 testified that in 2010, Bishop Tom Okello started complaining that when he called Leonard Ejom for meetings he did not come and for the whole of that year he did not meet him but Bishop Tom Okello visited the school and Ejom Leonard disappeared.

The defendant on the other hand testified that as regards the partnership contribution, the Plaintiff did not make any contribution nor payment of any money into the partnership account No. 1020072335 which was opened with centenary bank-Lira Branch in the names EJOM/BISHOP OKELLO and there was no evidence to that effect to date. He is the only person who appeared in the bank on the 5th/8/2000 and opened up the said account and even deposited his money Ugx. 850,000/- as part payment of his share contribution to the partnership.

DW1 further testified that after identifying the place for rent for the school premises, there was need to renovate the premises and, on the 20th /12/2000, the Plaintiff gave him Ugx. 300,000/purposely to carry out renovation of the rented premises and he acknowledged receipt in writing and the money was spent on renovation of classrooms before opening the school at Ocamonyang trading centre. In 2007, he sold his animals and property and he purchased land located at Alit village, Banya Parish in Amach sub-county from one Ambrose Okori and on 15th/9/2009, he applied to the area and committee of Amach sub-county for the grant of a freehold certificate of title and was approved by the Lira District Land Board. On 8th/12/2009. On 22nd/3/2010, Amach Modern Senior Secondary School limited was incorporated as a private limited liability company under the company laws of Uganda, it acquired the above land, obtained a certificate of title on 2/11/2010 and soon thereafter the school obtained a loan facility from post bank and centenary bank to a tune of Ugx. 900.000.000 which facilitated rapid construction at the school. Furthermore, there was no valuation of the property of Amach Modern Senior Secondary School as ordered by the court on the 11th/07/2014 as the school collapsed without acquiring any property in Ocamonyang Parish, but strongly and quite surprisingly, the property allegedly valued is of a different legal entity namely, M/s Amach Modern Senior Secondary School Limited and it is not the property of the partnership at all.

DW2 testified that he is aware and knows that the new school is a Private limited liability company, wholly started and registered as a company by Ejom Leonard and his family in the names of M/s Amach Modern Senior Secondary school.

The Partnership Act provides for instances where an account may be rendered.

Section 30 of the Partnership Act provides thus;

"Every partner is bound to render true accounts and full information of all things affecting the partnership to any partner or his or her legal representatives."

Section 31 of the Partnership Act provides;

"Every partner must account to the firm for any benefit derived by him or her without the consent of the other partners from any transaction concerning the partnership, or from any use by him or her of the partnership property, name or business connection."

Further, Section 32 of the Partnership Act provides thus,

"Where a partner, without the consent of the other partners, carries on any business of the same nature as, and competing with, that of the firm, the partner must account for and pay over to the firm all profits he or she made in that business"

Having found that the partnership exists between the parties, the defendant should render accounts to the plaintiff because from his own evidence he operated the school, Amach Modern Senior Secondary school from 2008 to 2010 only for him to incorporate it as a company. This very name was the name chosen for the partnership from way back in 2000 except without the word "limited". Secondly, the plaintiff testified that the defendant acquired loans and this was not disputed but affirmed by the defendant.

## **ISSUE 3: What remedies are available to the parties?**

The plaintiff in his witness statement sought from this court the following orders;

- a) A declaration that there is a partnership - b) An account of the partnership indicating the value and what is due to him - c) Recovery of all the monies spent by the defendant without the consent of the plaintiff as audited. - d) Recovery of the original land title for the school from Mr. Leonard Ejom. - e) An order directing the defendant to pay to the plaintiff 50% of the value of the partnership which is Ugx 606,282,500 or to allow him to run the school.

- f) General damages - g) Costs of the suit - h) Interest on c) and d) above at the commercial rate of 30% from the date of filing the suit until payment in full.

I have already made a finding that there still subsists a partnership between the plaintiff and the defendant and also that the defendant should render account of the partnership indicating the value and what is due to the plaintiff.

a) An order directing the defendant to pay 50% of the value of partnership

The plaintiff testified that he is entitled to 50% of the partnership and the defendant is also entitled to 50%. This was not challenged in evidence. The partnership deed between the two parties is also silent of what each party was entitled to. I therefore order that the defendant should pay the plaintiff 50% of the value of the partnership.

### b) Recovery of the original land title of the school from Mr. Ejom Leonard.

With regard to the land title for the school, the defendant testified that he sold animals and property and purchased land located at Alit village, Banya Parish in Amach sub-county from one Ambrose Okori and also applied to the area land committee of Amach sub-county for grant of free hold certificate of title. This was corroborated by DW2. The defendant produced evidence of a land sale agreement between him and Ambrose Okori marked DExh10 which shows that the vendor was Mr. Mzee Ambrose Okori and the defendant was the purchaser of the land, not the school, Amach Modern Senior Secondary School. The agreement clearly states that the land was bought on the 20th Feb. 2007. I do not make an order as to recovery of the original land title of the school from the defendant.

#### c) General damages

The law on general damages is that the damages are awarded at the discretion of the court and the purpose is to restore the aggrieved person to the position they would have been in had the breach or wrong not occurred. (see Charles Acire v M. Engola, H.c. Civil Suit No. 143 of 1993, Kibimba Rice Ltd v Umar Salim, S. C. Civil Appeal No. 17 of 1992)

In the assessment of general damages, the court should be guided by the value of the subject matter, the economic inconvenience that the plaintiff may have been put through and the nature and extent of the injury suffered. (See Bank of Uganda V Fred William Masaba & 5 ors SCCA No. 3 of 1998). It is a settled legal position that general damages are the direct natural or probable consequence of the act complained of. I award the plaintiff damages of 10.000.000 /-

d) Recovery of monies spent by the defendant

I make no order as to recovery of all the monies spent by the defendant without the consent of the plaintiff as audited. There was no evidence adduced by the plaintiff that the defendant used monies without his consent and neither has an audit taken place.

e) Interest and costs

$\overline{\mathbf{e}}$

It is a settled position of law that interest is awarded at the discretion of the court, but like all discretions it must be exercised judiciously taking into account all circumstances of the case. (See Uganda Revenue Authority V Stephen Mabosi SCCA No.1 of 1996.)

The plaintiff sought interest recovery of monies spent by the defendant without the consent of the plaintiff, I make no order as to interest and costs.

Dated at Lira this $22^{n_0}$ day of November 2023

**ALEX MACKAY AJIJI**

**JUDGE**