Priamit Enterprises Limited v Attorney General (Civil Suit 516 of 1996) [1998] UGHCCD 1 (2 July 1998)

Full Case Text

## TUB republic or uoanda. 'bL THE HIGH yiJRT tIF UGANDA\_A1'KAMPAl A CIVIL SUIT NO.516 OF 1996

## PRIAMIT EN TERPRISES LTD PLAINTIFF

#### VERSUS

DEFENDANT ATTORNEY GENERAL OF UGANDA

## BEFORE: THE. H6n. MR. AG. JUSTICE D. AKITKI-KITZA

# KULtNb;

Iliis is a suit brought against the Attorney General in representative capacity, and the plaintiff is claiming a total sum of UG. Shs. 8,812,500/- being the cost of tyres supplied to the defunct Uganda Transport Company (1975) Limited, a Company owned by the Government of Uganda

When tile case value up for hearing Mi. Joseph Matsiko, the learned counsel representing the Attorney General, raised a preliminary objection in that, the suit does not disclose a cause of action against tlie Attorney General in that the amended plaint alleges that, the tyres in question were sold to Uganda Transport Company(1975) Limited, a body corporate with power to sue and be sued in its own right. Hence, the government can not be held liable for debts of a Company with limicd liability. He submitted further, tliat tliis Is the case, PERD Statute notwithstanding, as the plaint does not even allege that Uganda Tramport Company was sold off. md the money was put on PERD account.

He submitted that the Supreme Court held in similar circumstance;, Eke those pertaining here, in die case of MUGENYI AND COMPANY ADVCCATES VS THE ATTORNEY GENERAL Supreme Court Civil Appeal No.43/95 that, Uganda Transport Company (1975) Ltd, was an independent Company, with limited liability which can sue or be sued. I

In the above case, the appellant sought to recover money owned to the firm of advocates from ilw government for legal services rendered to Uganda Transport Company (1975) Ltd. lheir Lordships held that, the action against the government was unattainable

On the other hand, Mr. Mugenyi, the learned Counsel for plaintiff submitted that, the objection was premature and that it should have been considered after adducing the evidence, as in this case the government is clearly liable, both in law and on the facts He relied on 8.23 of PERD Statute, and that the government is liable to pay the plaintiff by virtue of die Disinvesturc Statute. That Section 23 diercof, makes die.. 5 plaintiff\* a creditor of the Public Enterprise which is UTC (1975) Ltd. That the money to meet the companies debts should come from the PEED account, and he submitted further to the effect that, as UTC (1975^ was a government company, the Government should be held liable. He termed UTC (1975) Ltd as among a Special type of companies set up by die government under supervision of parliament. Tliis . removes the company from any other type of company. He submitted further thi the case by the Supreme Court, (MUGFNYI CASE) does not apply here because S.23 of PERD Statute was never discussed. He also cited the case of this court, MUGENY1 AND COMPANY ADVOCATES VS ATTORNEY\_\_GENERAL H. C. C. S. 663/94, where die government was held liable in similar circumstances. He strayed for the overruling of the preliminary objection with costs.

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**f ;** I have carefully considered the submission of both learned counsel, and perused the plaint, hi niy view, the issue al hand is whether, the plaintiff can successfully sue the *i* Attorney^General. 1 willset out below die relevant paragraph of the plaint.

The plaintiffs claim against the defendant is for Sits. 8,812,500/- 3.

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Prior to 8111 June, 1994, die plaintiffsupplied tyres to Uganda Transport Co. (1975) Ltd (hereinafter referred to as the ''Company") a Company which the Uganda Government h the sole shareholder/member/proprietor.

The said Company owes die plaintiff Sius. 8.812,500/- for the lyres supplied. Documents pertaining to the supply of the lyres to their company are hereto attached as annexture "Al" to "A"

The Company has defaulted to pay the said amount and despite several repeated demands the latter has refused, neglected and / or failed to pay the same or any part thereof.

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**is**

The Uganda Government is the sole shareholderTKlember,Proprietor ofthe Company caused General Notice No.35 of 1994 and an advertisement to be pul in the Uganda Gazette of 1.7.94 and in the New Vision Newspaper of 2.8.94 respectively so as to sell the Company's assets and terminate its existence. Copies of the said Gazette and New Vision newspaper cuttings are attached hereto marked "B" and "C" respectively.

The Uganda Government is the sole shareholder/member/proprietor of the company and at all material times operated/ran it as such. A copy ofthe Articles and Memorandum of Association are attached and marked as "D"

9. The plaintiffshall contend that by reason of the above mentioned facts and S.23 ofthe PERD Statute, the divestiture is liable to pay the plaintiff from the divestiture account set up under the said statute the sum of Sirs.8,812,500/= incurred by the company.

In the case of MUGENY1. AND COMPANY. ADVOCAIES VS. 1HE ATrORNEY GENER AL CIVIL APPEAL NO.43/95. the court was almost faced with similar situation where, the app'ellant/plaintiff sought to recover his fees from the Attorney General. The fees were due to them for professional services rendered to the Uganda Transport Company (1975) Ltd. The Attorney General was sued as in die instant case, in hi\$ representative capacity under the Government Proceedings Act (Cap 69).

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The issue in casC in [jus onc, whether the Govenunenl was liable for the debts of the Company. Ihe main judgment of the Supreme Court was that Hon. Justice 8 W. Wambuzi C. J.. who reviewed both the evidence and the law applicable and had the following to say. at page 14 of his judgment.:-

V. In hisjudgment the learned trial Judge held.

'should I be held to be wrong in saying there is no company, the result would be that the Company was legally incorporated, and the plaintiff would have to prove in liquidation. This is a novel point on which there is no direct authority that I can trace, or which lias been referred to me.'

There is no appeal against this finding and I would accordingly confirm the learned trial Judge's finding to the effect that, the Company is a legal persona responsible for its own debts " (emphasis supplied).

The learned Cliief Justice while concluding liis judgment, had the following to say, at 14:-

It is to the effect that, the learned trialjudge was wrong to say that there is "no Company'\* as there was a duly and legally incorporated private company in the names .... of Uganda Transport Co. (1975) Ltd.,

pugk ihcruol, the • • - 't psIll 1 'uMk. •• •Oct .. t.'li III', learned Justice of Lhc Supreme Court had the following to say.

\*\* on the authority ot the case of Solomon Vs. Solomon 11897] At' 45, 1 think that I Iganda Transport Company (1975) Ltd.. was dully incorporated as a private company with share capital and limited liability '

With the greatest respect which in any case bind me. I entirely associate myself with their Lordsliips' findings, It was the same company before their Lordships in the

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Supreme Court, as in the instant case before me. I accordingly hold that, Uganda Transport Company (1975) Ltd., is a "legal persona responsible for its debts."

Mr. Mugenyi for the plaintiff submitted that the situation has been now altered by S.23 of the PERD Statute, in that, the Government is liable to pay the plaintiff from the divestiture account set up under that Statute. Section 23 of the PERD Statute provides as under: $\cdot$

"23. Government through the responsible Minister and the Board of Directors and Management of the Public enterprise may use the proceeds of sale in the Divestiture Account::-

- to pay off debts, if any, or otherwise compromise with creditors of $(a)$ the public enterprise; - $(b)$ - $(c)$

It is therefore Mr. Mugenyi's contention that, under this section, the government is liable.

Mr. Matsiko does not agree with him and submitted to the effect that, what S.23 (a) of PERD Statute is saying is that, the Government has discretion to apply the proceeding of sale to jay off debts of the creditors of the public enterprise. He stated further that, it is only when Uganda Transport Company (1975) Ltd is sold, then the Government, through is authorized agents i.e. the Minister or Board of Directors may, but not must, consider settling the debts. He went on to say that, the pleadings do not say that Uganda Transport Company (1975) Ltd. was sold and that funds are now on the PERD Account.

I would agree with the interpretation put by Mr. Matsiko to section 23(a) of the PERD Statute. Firstly the words used in the section are "may use the proceeds" which does not give an unfettered right to the plaintiff to be paid from the PERD account. $\mathsf{The}$

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to how to use Hie Minislei and the Board of Directors, arc clearly given a discretion as money from the sale oi the public enterprise.

Secondly, the wording of S.23 (a) of the PERD Statute, in my view, is very' clear, in that, it talks of

> ofthe " may use the proceeds ofthe sale ....'to pay off\* debts public enterprise ''

It is my understanding of this section, that, tlie money fipm wliich the Minister and the Board ol Directors^may consider to pay the debtor should come from the relevant public enterprise actually owing money to the debtor, but not any mnnevTm the PERD account irrespective of whether the enterprise owing money tc the debtor has been sold or not. The legislature used the words "

to pay oft debts with creditors oi the public enterprise'\* (emphasis supplied)

meaning, in my view, the very unteiprise owing money to the debtor. The use, ofthe definite article "the' narrows the field from wliere the funds could come from to th veiy defaulting one. and no any other. As the pleadings stand, the amended plaint does not tell us that the defaulting company hai already been sold, and that the proceeds arc now on the PERD account.

Die amended plaint has no any attachmenls/anncxtures. as pleaded in various paragraphs. It was filed on the 27/4-/98. Assuming that, the atlachment/annexturc originally put on the original plaint, can be of any use.to the plaintiff, annexture uBv is a General Notice No.85/94 appointing Joint Liquidators of Uganda Transport Company (1.975) limited, as G. W. Egaddu and F. Miagereza. In that notice, all suppliers of goods and services having claim on the company were given 14 days to lodge in their claims. It would appear that, the plaintiff never put in their claim within that period. Instead they have decided to sue tlie government through the Attorney' General.

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All in alt-I find tlial the plaintiff can nut be allowed to sue the government through the Attomev General, but should have brought the action against the delaulting company which is a persona, responsible for its own debts. Secondly PERD Statute (S.23) does not assist the plaintiff as the sale of the Uganda Transport Company (1975) Ltd. was never specifically pleaded.

All in all. I would uphold the preliminary objection raised bv the Attomev General and I would strike out the plaint with costs to the defendant for suing a wrong party. I so order.

D. AKHK1 - KUZA

AG. JUDGE.

P7/98

2/7/98: Both parlies absent.

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Court' It is now ?.|() p m. No one has appeared for Ruling. I have decided to read it in absence of' parties. They can consult the Registrar (Civil).

[CI-KUZA **d. z\Ln<**

AG. JUDGE.

2'7/98

2.10 p.m.

*lill'W* al 3.00 pm Mugeiiyi

Ct. Judgement (Ruling) delivered

#### D. WANGUTUSI

REGISTRAR