Rentco Africa Limited v Tondeka Metro Company Limited (Miscellaneous Application 588 of 2024) [2024] UGCommC 98 (22 April 2024)

## 5 **THE REPUBLIC OF UGANDA**

## **IN THE HIGH COURT OF UGANDA AT KAMPALA**

#### **COMMERCIAL DIVISION**

#### **MISCELLANEOUS APPLICATION NO. 0588 OF 2024**

## **ARISING FROM MISCELLANEOUS CAUSE NO. 0027 OF 2024**

10 **RENTCO AFRICA LTD. :::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT**

#### **VERSUS**

# **TONDEKA METRO COMPANY LTD. ::::::::::::::::::::::::::::::::::::::::: RESPONDENT Before Hon. Lady Justice Harriet Grace Magala**

#### **Ruling**

#### 15 **Background**

The Respondent under section 6(1) of the Arbitration and Conciliation Act, sections 33 and 38 of the Judicature Act; section 98 of the Civil Procedure Act and Order 41 Rules 1, 2 and 3 of the Civil Procedure Act filed *Miscellaneous Cause No. 0027 of 2024: Tondeka Metro Company Ltd. Versus Rentco Africa Ltd.* in this

- 20 honourable court. The Applicant was seeking for orders that: - 1. An interim measure of protection and injunction is issued to maintain the status quo restraining the Respondent, its officials, directors, shareholders, receivers, employees, agents, assignees, attorneys, representatives, creditors or persons acting on their behalf , and or claiming an interest 25 through the Respondent from taking possession of, impounding, selling,

5 mortgaging, pledging , assigning, transferring, operating, alienating, disposing of, or taking any steps or carrying out actions capable of affecting or interfering with the Applicant's possession, operation, claim and/ or interests in the Buses Registration numbers **UBM 015C , UBM 708F, UBM 711F , UBM 864E** and **UBM 890F** pending arbitration proceedings; and

10 2. Costs of the Application.

On the 5th March 2024, this Court issued an Administrative Interim Order to the Applicant in Misc. Cause No. 0027 of 2024 and the matter was fixed for hearing inter party on the 11th March 2024. There is an affidavit of service on the Court Record as proof that the Chamber Summons in Misc. Cause No. 0027 of 2024 and 15 the Administrative Interim Order were served onto the Respondent at their offices located at BMK House, level 5. The said Order was then extended by Court

to the 11th March 2024 in light of the fact that 8th March 2024 was a public holiday.

When Misc. Cause No. 0027 of 2024 was called for hearing on the 11th March

- 20 2024, only the Applicant was present in Court. The Court was insistent on hearing the matter inter party. To this end the hearing was adjourned to 16th April 2024 and the Administrative Interim Order was also extended to the 16th April 2024. The Respondent was however not notified of the extension. The Respondent only became aware of the extended order on the 27th March 2024 after the buses (the - 25 subject matter of the dispute) had been impounded and repossessed by the Respondent on the 26th March 2024.

The Respondent, now Applicant filed *Miscellaneous Application No. 0588 of 2024: Rentco Africa Ltd.- vs- Tondeka Metro Company Ltd* seeking for order that the

5 Interim Administrative Order issued by this honourable court be vacated for being overtaken by events and costs of the Application.

The Affidavits in support and rejoinder to the Application were deposed by Elizabeth Kasenene Rumanyika, the Uganda Country Director of M/s Rentco Africa Ltd. The affidavit opposing the Application was deposed by Stephen Mwanje, a

10 Director of the Respondent Company.

## **Representation**

The Applicant was represented jointly by M/s Geoffrey Nangumya & Co. Advocates and M/s Semuyaba, Iga & Co. Advocates. The Respondent was represented jointly by M/s Kimara Advocates & Consultants and M/s Tumusiime,

15 Kabega & Co. Advocates.

## **Hearing**

The Parties made oral submissions. For the Applicant, submissions were made by Mr. Iga Saidi Bukenya and the for the Respondent submissions were jointly made by Mr. Ronald Oine and Mr. Kimara Arnold Norgan.

- 20 At the hearing, Counsel for the Respondent raised two preliminary objections. - 1. That the Applicant was in contempt of court; and - 2. That Miscellaneous Application No. 0588/2024 offended the *lis pendens Rule.*

#### 5 **Whether the Applicant was in contempt of court**

#### **Applicant's submissions**

It was the submission of learned counsel for the Respondent that the Applicant acted in contempt of the court order and proceedings when it impounded and repossessed the buses on the 26th March 2024. That the Applicant was made aware of the court proceedings in Misc. Cause No. 0027/2024 when on the 6th 10

- March 2024 it was served with the Chamber Summons and the Administrative Interim Order dated 5th March 2024. Counsel for the Applicant drew court's attention to an affidavit of service sworn by Mwambutsya Anthony on the 7th March 2024. Mr. Kimara, counsel for the Respondent further submitted that - when the Administrative Interim Order issued on the 5 15 th March 2024 was extended by this Court to the 11th March 2024, the Applicant was notified and Counsel drew Court's attention to the Affidavit of Service on the court record dated 7th March 2024 as proof that the extended Oder was served onto the Applicant on the 7th March 2024. Counsel Oine for the Respondent supplemented - 20 the submissions of Mr. Kimara by stating that the Applicants were aware of the Court proceedings and should have been prudent to come to court and find what could have transpired on the 11th March 2024 when they did not turn up in court. It was submitted for the Respondent that no evidence was adduced in court that the Applicant approached court to establish the *status quo* of the matter as at - 11th March 2024. That anything done after the 11 25 th March 2024 was in contempt of court proceedings and order. The Applicant's hands were not clean and he who seeks equity must come with clean hands.

Page **4** of **26**

- 5 Mr. Oine further submitted that this court should not condone the acts of the Applicant because it was aware of the Court proceedings and court should therefore not legalize their contemptuous actions which would cause an absurdity. It was the submission of learned counsel for the Respondent that the Applicant should be held in contempt of court for ceasing and repossessing the - 10 suit buses even when they were made aware of the court proceedings as early as 6 th March 2024.

Counsel cited and relied on the case of **Mrs. Geraldine Busuulwa Ssali – versus – National Social Security Fund & 2 Others, Miscellaneous Application No. 0116 of 2016** where Hon. Mr. Justice Stephen Musota, J (as he then was) at page 10 - 11 15 of the Ruling held that:

"…the law on contempt of court as was well articulated in the often quoted case of **Megha Industries (U) Ltd. Vs Conform (U) Ltd** where the court citing the **Sitenda Sebalu case** ruled that for contempt of court to exist there must be a lawful court order, and the potential contemnor must have 20 been aware of the court order and failed to comply with the order or disobeyed the court".

The Learned trial judge further stated that:

"*I will however add that a party who takes deliberate steps to undermine the court process by deliberately altering the status quo when he/she is* 25 *aware of an ongoing court process and is participating therein and is aware of the prayers sought in the proceedings, should be held in contempt of court".*

5 Learned Counsel for the Respondent further submitted that the Applicants should not be allowed audience by this court until they have purged themselves of the contempt. He cited and relied on the case of **Kabale University versus Henry Rwaganika & Yosamu Baguma Appeal No. 0007 of 2016** where at page 4 of the Ruling the now retired Hon. Lady Justice Flavia Senoga Anglin relying on the

10 principle in **Hutchinson vs Hutchison [1952] 2 AUER 579** stated that:

"*And indeed the principle established by decided cases is that "a party in contempt by disobeying an existing order cannot be heard in a related cause of action until such a person has purged himself of that contempt".*

It was further stated in the **Kabale University Case** that:

15 "*The principle is meant to deter parties from contempt and to send a strong message that court orders should be obeyed and that there are consequences for disobedience of court orders. And courts have emphasized that "a court of law never acts in vain and as such, issues touching on contempt take precedence over any other case of invocation of the* 20 *jurisdiction of court"- see Wildlife Lodges Ltd. Vs. City Council of Narok & Anor. [2005] EA 344 (HCK)".*

It was further submitted for the Respondent that as a result of the Applicant's contempt, the Applicant illegally attached and repossessed the suit buses. The Applicant neither had the authority or instrument from this court or an arbitral 25 tribunal to attach and repossess the buses. In any event, arbitral proceedings had been commenced and the Respondent sought the intervention of court under section 6 of the Arbitration and Conciliation Act. Learned Counsel for the Respondent cited and relied on the case of **Musoke Mike & Anor versus Kalumba**

Page **6** of **26**

5 **James – Revision Cause No. 09 of 2019** where Bashaija K. Andrew, J cited and relied on the case of **Makula International Limited versus His Eminence Cardinal Nsubuga & Anor** where it was held that:

"*A court of law cannot sanction what is illegal and illegality once brought to the attention of court overrides all questions of pleading, including any* 10 *admission made thereon".*

In the case of **Musoke Mike & Anor (supra)** the Judge held that:

*"Since the illegality supersedes everything, including pleadings or admission made thereon, the merits of the issues of the application need not be inquired into as they arise from a nullity. Equally the orders sought by the* 15 *Applicants herein that to be allowed to file a defense in the trial court would not arise against proceedings that are null and void. All orders sought in respect of the proceedings in the trial court are effectively overtaken by the findings herein pertaining to the preliminary objection".*

Learned Counsel further drew court's attention to illegal acts committed by the

- 20 Applicant in impounding and repossessing the buses. He drew the Court's attention to **Annexture "B"** the Assets/ Inventory Record and the following anomalies: - a) Case File number the actual case number was not indicated. In its place, the following was written "*Repossession of 5 (five) buses from Tondeka* 25 *Management for inspection and ….(word not clear)";* - b) The person found at home / Office it was observed that people's surnames (Mukasa, Muhwezi, Muleme) and phone numbers were recorded. The names were not in full and none of them signed against their names;

5 c) Items taken by attachment / or any other action taken- it was the contention of the Respondent that one cannot attach without a court order and services of the Police cannot be obtained without a court order;

10 SSP Okoyo, OC Traffic CPS, SP Mukibi and a one Mukasa identified as driver.

- d) Officials witnessed it was observed that no court appointed official witnessed this exercise. There was only a one Kirunda Moses, the DPC CPS - Learned Counsel for the Respondent also drew court's attention to a letter dated 4 th April 2024, referenced PLS 62/211/01 Vol. 221 addressed to the Police Commander – Kampala Metropolitan Police CPS Kampala by the Inspector General of Police where the addressee was being advised that the process of impounding 15 the buses should be effected by court officials appointed for that purpose since the matter was pending adjudication in court. The last two paragraphs in the said letter stated that and I quote them verbatim:

"*This is therefore to require that if the buses were impounded without a court order or through any other action, the same should be recalled.*

20 *This therefore is to require that you ensure the buses impounded are returned to the possession of Tondeka Metro Co. Ltd unless there is a court order prohibiting this requirement".*

It was the submission of learned counsel that to date the Applicant has never produced any court order allowing it to impound the buses. The Applicant was 25 advised to return the buses in the absence of an order and failure to do so should not be condoned by court. It was further submitted for the Respondent that the Lease Agreement referred any dispute between the Parties to arbitration. Learned Counsel for the Respondent submitted that when the Applicant disregarded the

Page **8** of **26**

- 5 arbitration agreement between the parties and went on to impound and repossess the buses, it over stepped its rights. The Applicant's action were unlawful and illegal. He cited and relied on the case of **Monitor Publications Ltd. – versus – Attorney General, Civil Suit No. 747 of 2013** where David Wangutusi, J held that: - "*Having found that they overstepped their mandate, all those actions that* 10 *where done which included switching off the radios, servers, being hostile, roughing up employees of the Plaintiff and threatening to throw a presenter through the window of the fourth floor were unlawful".*

In conclusion, learned counsel for the Respondent prayed that Court be pleased to hold the Applicant in contempt of court orders and proceedings and that the 15 actions of repossessing the suit buses were illegal. And that as a result of this illegality, court should not hear them. Learned Counsel prayed that court issues an order to release the suit buses to the Respondent.

# **Respondent's submission in reply**

It was the submission of Learned Counsel for the Applicant that the Applicant did 20 not act in contempt of court. He referred court to the Master Lease Agreement between the parties dated 11th December 2020 and Clause 1.5 on Notices which states that:

"Any notice, request, or consent made pursuant to this Agreement shall be in writing and shall be deemed to have been made when delivered in 25 person to an authorized representative of the party to whom the communication is addressed or when sent by registered mail to parties in this Agreement, shall be deemed to have been received by the addressee seven (7) days after posting if sent by registered post or on delivery if by hand

30 The Lessor's address for purposes of notice is: 5 The Country Manager RentCo Africa Limited Kampala Serena Hotel also known as Serena Conference Center Office No. 245a Kampala –Uganda

10 E-mail : [info@rentcoafrica.com](mailto:info@rentcoafrica.com)

Mobile: +256774669089"

It was the submission of Mr. Bukenya that the Applicant was not aware of any court proceedings or orders in Misc. Cause No. 0027/2024 because it was never served. The documents were delivered to the wrong address (BMK House, level 5)

- 15 and whoever received them was not authorized to do so. He further submitted that the Agreement was clear on where documents should be deliver, who should receive them and in addition, there is a cell phone number which the Respondent could have called. That the country manager of the Applicant company is based in Nairobi. The secretary who received the documents was not the principal officer - 20 of the Applicant company. That whereas the Chamber Summons and Orders bore a stamp, it was not stated who received them, there was no signature and date. He submitted that the Respondent cannot say they served and that the stamp could have been picked off the streets and embossed on the documents.

He submitted that the law on serving corporations was very clear. He drew court's

25 attention to Order 29 rule 2 of the Civil Procedure Rules, and also cited and relied on the case of **Kyambogo University versus The Heights Ltd, Miscellaneous Application No. 0954 of 2015.** In the said case, it was defence of the Respondent that service onto the Applicant was effected and therefore deemed effective when the summons to file a defence were served onto a clerical secretary of the

5 Applicant and stamped. The Learned trial judge, Christopher Madrama Izama, J (as he then was) held that:

> *"In the premises, service was effected on a person who was not authorized and to make matters worse, the summons and copy of the plaint was not brought to the attention of an authorized person in time. In the premises,*

10 *there was no good service on the Applicant and the interlocutory judgment entered by the Registrar on the 2nd October 2015 is hereby set aside".*

Learned counsel for the Applicant submitted that the buses were legally repossessed. He drew court's attention to a letter dated 1st February 2024 from M/s Geoffrey Nangumya & Co. Advocates to the Managing Director of the

- 15 Respondent. It was a demand notice for payment of arrears and repossession of the buses. The letter stated that the Respondent was in breach of Clause 23 of the Master Lease Agreement and that if the Respondent did not respond positively to the demand, the buses would be repossessed under Clause 24 of the Master Lease Agreement after the lapse thirty (30) days. - 20 Mr. Bukenya submitted that after thirty days lapsed, the Applicant proceeded to terminate the master lease agreement and repossess the buses in accordance with Clause 24 of the Master Lease Agreement. It was submitted for the Applicant that the buses were repossessed under **Clause 24 (a)(i)** which states that:

*"(a) Upon the occurrence of a breach by the Lessee and without prejudice to* 25 *the Lessor's other rights and remedies hereunder, the Lessor may in its sole and absolute discretion do all or any of the following:*

> *(i) At any time after a notice of thirty (30) days (whether or not the Lessor may subsequently accept payments by the Lessee) demand or*

Page **11** of **26**

5 *retake possession of the vehicle until such time as the Lessee remedies the breach or satisfies the Lessor that the breach in respect of which the powers contained herein were exercised does not or will not prejudicially affect the vehicle or the rights of the lessor to the vehicle or under any agreement following which the Motor Vehicle* 10 *shall be redelivered to the Lessee upon payment of the reasonable costs of the Lessor in the exercise of the Lessor's rights hereunder. For this purpose, the Lessor may by its officers or agents enter, where necessary by force onto any property occupied by the Lessee and (as the agent of the Lessee) on any other property which the Lessee* 15 *might enter upon where the vehicle may be or be supposed to be; and/or" …*

In conclusion, Mr. Bukenya submitted that the Master Lease Agreement was selfexecuting. The Respondent was asked to remedy the breach within thirty days and it did not. The Agreement thereby terminated and this prompted the Applicant to repossess the buses on the 26 20 th March 2024. He cited and relied on the case of **Barclays Bank versus Samuel Black HCCS No. 223/2010.** The facts in this case were that the Parties executed a Master Lease Agreement. The said agreements provided for the Plaintiff to finance the purchase of two Nissan Diesel buses for the benefit of the Defendant. In consideration for the provision of the 25 said buses, the Defendant undertook to pay monthly rentals for a period of thirtysix months commencing on the 25th December 2008 to 25th December 2011 when the Defendant could opt to purchase the vehicles at 5% of the capital cost. The Plaintiff purchased the buses and handed them over to the Defendant who started utilising them and started paying monthly rental fees until he defaulted.

- 5 This prompted the Plaintiff to recall the lease facility. The Plaintiff issued a final demand notice to the Defendant who made promises to settle the arrears within two weeks but did not do so. The Plaintiff then repossessed the buses forcefully through M/s Armstrong Auctioneers. One of the issues for the determination of court was whether the repossession and selling of the leased buses was lawful. - 10 The Court held that:

"*From the above , it is clear that the lease agreement was self-executing for when the Defendant failed to meet his obligations , the Plaintiff had the right to lawfully repossess the buses even without any further notice to the Defendant and so my finding is that the action of the Plaintiff was well* 15 *within the provisions of the lease facility agreement since there was a major breach on the part of the Defendant in regards to the terms of the lease facility agreement for he failed not to only meet the monthly lease agreement but even when given the opportunity to have the situation ameliorated failed to do so thus acting contrary to the terms of the lease* 20 *facility agreement".*

**Whether Miscellaneous Application No. 0588/2024 offended the** *lis pendens Rule*

## **Respondent's submissions**

25 It was the submission of the Respondent that the current application violated section 6 of the Civil Procedure Act. He submitted that the matters in issue were the same. Counsel Kimara referred court to paragraphs 2,3,4 & 9 of the Affidavit

5 in Support to MA 0588 of 2024 and paragraphs 10 and 15 of Misc. Cause 0027 of 2024. Reference was also made to the similarity between paragraphs 4, 5,6,8,9,11,12,13,14,16,17,18,19,20 of MA 0588/2024 and paragraphs 4,5,6,7,8,9,1,12-21 & 22 of Misc. Cause 0027 OF 2024.

He further submitted that the Parties were the same, both suits were in the same

10 court and before the same trial judge; and that the present application was filed while Misc. Cause was still pending in this court.

He submitted that section 6 of the Civil Procedure Act should be read together with section 33 of the Judicature Act which empowers court in its administration of justice to as much as possible avoid multiplicity of suits. He submitted that

15 filing of the present application was an abuse of the court process. To support his argument, learned counsel cited and relied on the case of **Springs International Hotel Ltd. Versus Hotel Diplomate Ltd. & Anor Civil Suit No. 0227 of 2011** pages 10-11.

He prayed that court be pleased to find that the present application offended the 20 *lis pendens Rule* and its should be dismissed with costs to the Respondent.

# **Applicant's submission in reply**

Learned Counsel for the Applicant submitted that this application was not an abuse of the court process. The Applicant upon receiving the Court Order on the 27th 25 March 2024 felt obligated to inform court that the conditions had changed and there was need to vacate the court order. The court was referred to paragraph 20 of the Affidavit in Rejoinder to this application where the deponent stated that the

Page **14** of **26**

5 after the buses were repossessed, they had since been repainted and rebranded. And further to this, the Applicant had executed a new Master Lease Agreement with M/s Goldline Express Services who were now in exclusive use of the buses.

## **Respondent's submissions in rejoinder**

The Respondent reiterated and re-emphasized their earlier submissions on the 10 illegality of the manner in which the buses were repossessed. That whereas Moses Kirunda was a court licenced bailiff, he did not have instrument or authority from court authorising him to impound the suit buses.

It was submitted for the Respondent that the whereas the Applicant purported to terminate the agreement under clauses 23 and 24, the Arbitration agreement 15 between the parties would survive the termination.

It was further submitted for the Respondent that the Applicant could not plead that any formal notices, communications and pleadings were served at the wrong address. The Respondent drew court's attention to the affidavit in rejoinder by Mr. Stephen Mwanje to Misc. Cause No. 0027/2024 paragraph 5.3 and the affidavit in

20 reply by Mr. Stephen Mwanje to Misc. Application No. 0588/2024 paragraph 7.3 to show how the Respondent arrived at a decision to serve notices to the Applicant at th eir offices located at BMK House level 5.

Learned Counsel for the Respondent further drew Court's attention to the tax invoices that were attached as annextures to the affidavit in reply deposed by

25 Elizabeth Kasenene Rumanyika to Misc. Cause No. 0027/2024. The said tax invoices indicated the address of the Applicant as "*Suite 512, 5th Floor BMK House Wampewo Avenue-Kampala".*

- 5 It also submitted for the Respondent that it could not be bothered with the indoor management rules on who received official communications and how they were received. In any event some documents the Applicant admits to having received did not have any name of the receiving officer. Some documents had only a stamp and date while another document had a stamp, date and signature. - 10 The Respondent in conclusion submitted that the Applicant was at all material times aware of the court orders and proceedings in respect of Misc. Cause No. 0027/2024 because all notices and letters in respect of the relationship between the Parties were served onto them at their known address at BMK House, Level 5.

The Respondent's counsel prayed that the court be pleased to uphold their 15 preliminary objections with costs to them.

# **Determination**

## **Whether the Applicant was in contempt of court**

For the court to come to a conclusion as to whether the Applicant was in contempt of court orders and proceedings, it must be satisfied that the Applicant 20 was served with the pleadings, notices and any other documents that relate to the dispute between the parties arising out of the Master Lease Agreement.

At the hearing, learned counsel for the Applicant submitted that the pleadings, notices and orders were served at the wrong address. From the Respondent's affidavit in reply to this application paragraphs 7.1 ,7.2 and 7.3, it was stated that

when the Applicant issued the demand notice dated 1st 25 February 2024, the Respondent invoked the arbitration agreement between the parties. The Respondent made an effort to serve the Applicant the notice at its last known

- 5 address (Serena Conference Centre) but the Applicant was no longer as the said address. It is only after an internet search that the Respondent was able to establish that the Applicant's new address was BMK House, 5th Floor Suite 512, Wampewo Avenue Kololo. The same averments were made by the Respondent in its affidavit in rejoinder to Misc. Cause No. 0027/2024 under paragraphs 5- 5.1., - 10 5.2 and 5.3.

It was not denied by the Applicant that they changed their physical address from Serena Conference Centre to BMK House, 5th Floor Suite 512.

I am agreement with the submissions of learned counsel for the Applicant on the law regarding service on corporations. **Order 29 rule 2 (a) of the Civil Procedure**

15 **Rules as amended states that:**

*"Subject to any statutory provision regulating service of process, where the suit is against a corporation, the summons may be served on a secretary or on any director or other principal officer of the corporation; or …".*

The **Companies Act, Act 1 of 2012** defines a **director** as *"includes any person* 20 *occupying the position of director by whatever name called and shall include a [shadow director](https://ulii.org/akn/ug/act/2012/1/eng@2015-07-01#defn-term-shadow_director)".* The Companies Act does not have a definition of a principal officer but it defines an **officer** as "*in relation to body corporate, includes a [director,](https://ulii.org/akn/ug/act/2012/1/eng@2015-07-01#defn-term-director) manager or [secretary](https://ulii.org/akn/ug/act/2012/1/eng@2015-07-01#defn-term-secretary)"*

A principal in law can be defined as a person who has controlling authority of who 25 is in a leading position. The Companies Act does not define who a secretary is but under **sections 187,188 and 190** it gives mandates every company to have a secretary, who can and cannot be a secretary and guides on the qualifications of a company secretary especially for public companies. A secretary can be a person

5 or body corporate that is appointed by the directors to carry out the duties and functions of a secretary key among which is to ensure that the organization complies with existing relevant legislations and regulations; and keeps members of the board informed of their legal responsibilities.

I therefore agree with the Applicant that a clerical secretary or front desk officer is

10 not a secretary within the meaning of the Order 29 rule 2(a) of the Civil Procedure Rules as amended, the Companies Act of 2012 as amended or the common law on companies or corporations.

Learned counsel for the Applicant relied on the case of **Kyambogo University versus The Heights Ltd, Miscellaneous Application No. 0954 of 2015** where the

- 15 court held that service of summons upon a clerical secretary was not effective. The court record has two affidavits of service deposed by Mwambusya Anthony, a process server with M/s Kimara Advocates & Consultant. The first relates to service of Chamber Summons and the Administrative Interim Order that were issued by this court on the 5th March 2024. These were served onto the Applicant - on the 6 20 th March 2024. The second affidavit relates to the service of the extended Administrative Interim Order to the 11th March 2024 and the same was served onto to the Applicant on the 7th March 2024. The process server stated that on both occasions, he handed over the documents to the receptionist who then consulted the Managing Director of the Applicant Company after due - 25 consultation, the documents were returned with the stamp of the company. The Applicant also had the option with leave of court to cross examine the process server on the affidavits he deposed and were on the court record. This right was not exercised by the Applicant. In my considered opinion, a managing director is a

Page **18** of **26** 5 director or principal officer of the Applicant company within the meaning of the law and therefore find that Applicant was made aware of the court proceedings and orders in Misc. Cause No. 0027 of 2024.

Learned Counsel for the Applicant submitted that the stamp affixed on the chamber summons and Administrative Interim Order were picked off the street

- 10 by the Respondent. This was a submission from the bar since no evidence was adduced in court to prove that the Applicant had a different stamp from what appeared on the Master Lease Agreements dated 11th December 2020 and 4th March 2024, the Applicant's copy of the letter from the Respondent's Lawyers dated 19th February 2024 and 5th April 2024 on invoking the arbitration clause and - 15 regarding the request to appoint a single arbitrator respectively, and the Court Orders. **See sections 101, 102 and 103 of the Evidence Act.** This Court had the opportunity to examine most of the original documents relating to this dispute and established that the same stamp affixed by Applicant on the Order dated 27th March 2024, on the letters invoking the arbitration clause and requesting the - 20 Chartered Institute of Arbitrators was the same stamp affixed on the Chamber Summons and the Administrative Interim Orders dated 5th and 7th March 2024.

He further submitted that the Company stamp once affixed on any document had to bear the date, signature and name of the authorised company officer. The letter dated 19th February 2024 from the Respondent's Lawyers to the Country

25 Manager of the Applicant invoking the Arbitration Agreement was not denied by the Applicant. The Learned Counsel, Mr. Kimara for the Respondent made reference to this letter during his submissions. This letter bears a stamp of the Applicant. It does not state when it was received and by whom. The letter dated

- 5 5 th March 2024 also bears the stamp of the Applicant. It has a signature, date and time. The Applicant's copy of Administrative Interim Order dated 27th March 2024 has the stamp, date and time when received and a signature. The Respondent's copy of the same order only bears the date and a stamp. I have laboured to point out these inconsistencies to show that it is not true, as submitted by the Applicant - 10 that their stamp once affixed on any received document the name of person receiving the document, date and time when received and the signature of the authorized person must accompany the stamp. Court on the day of hearing established that the owner of the signature that appears on the documents highlighted above was Gerald Muhereza, the Country Head. - 15 Having found that the Applicant was aware of the court orders and proceedings in Misc. Cause No. 0027/2024, I now move on to determine whether the Applicant is in contempt of court.

**The Black's Law Dictionary, 11th Edition at page 397** defines contempt of court as the:

## 20 "*conduct that defies the authority or dignity of a court or legislature".*

Having found that the Applicant was aware of the court proceedings in Misc. Cause 0027/2024, I find that the Applicant acted in contempt of court when it ceased the suit buses and leased them out to M/s Goldline Express Services. Whereas the Respondent did not extract the extended Order in time before the buses were 25 repossessed the Applicant should have been concerned itself on what transpired in court on the 11th March 2024 when the matter was called for hearing. See the case of the case of **Mrs. Geraldine Busuulwa Ssali – versus – National Social Security**

Page **20** of **26**

5 **Fund & 2 Others, Miscellaneous Application No. 0116 of 2016** where Hon. Mr. Justice Stephen Musota, J (as he then was) at page 10 - 11 of the Ruling held that:

"…the law on contempt of court as was well articulated in the often quoted case of **Megha Industries (U) Ltd. Vs Conform (U) Ltd** where the court citing the **Sitenda Sebalu case** ruled that for contempt of court to exist there must 10 be a lawful court order, and the potential contemnor must have been aware of the court order and failed to comply with the order or disobeyed the court".

The Learned trial judge further stated that:

"*I will however add that a party who takes deliberate steps to undermine the* 15 *court process by deliberately altering the status quo when he/she is aware of an ongoing court process and is participating therein and is aware of the prayers sought in the proceedings, should be held in contempt of court".(emphasis is mine)*

When Mr. Bukenya was closing his submissions, he observed that the preliminary 20 objections raised by the Respondent and the manner in which they have been argued, the finding of court would dispose of both this Application and Misc. Cause 0027/2024. I am in agreement with this observation. This then leads me to Misc. Cause No. 0027/2024. The said cause was filed in this court under **section 6 (1) on Interim measures by the court of the Arbitration and Conciliation Act** which states 25 that:

> *"(1) A party to an arbitration agreement may apply to the court, before or during arbitral proceedings, for an interim measure of protection, and the court may grant that measure".*

- There is letter on the court record dated 19th 5 February 2024 from the Respondent's lawyers activating the Clause 31(b) of the Master Lease Agreement. In the said letter, the Respondent made reference to the letter dated 1st February 2024 from the Applicant's Lawyers. The said letter was a demand letter for arrears and notice to repossess the suit buses. The letter dated 19th February - 10 2024 as earlier stated was not denied by the Applicant. It was also the submission of the Respondent that once this letter was not responded to, another letter dated 5th March 2024 was written to the Chairman Chartered Institute of Arbitrators Uganda Branch requesting the Institute to appoint a single arbitrator.

Learned counsel for the Applicant submitted that the arbitration clause was

15 inoperable because under Clause 24(a)(i) of the Master Lease Agreement the relationship between the parties stood terminated after the thirty days lapsed from 1st February 2024 when the demand letter/ notice of repossession of the suit buses was sent to the Respondent by the Applicant.

I find that the Applicant selectively read and or interpreted this clause in its 20 favour. **Clause 24 (a)(i)** which states that:

> *"(a) Upon the occurrence of a breach by the Lessee and without prejudice to the Lessor's other rights and remedies hereunder, the Lessor may in its sole and absolute discretion do all or any of the following:*

*(I) At any time after a notice of thirty (30) days (whether or not the* 25 *Lessor may subsequently accept payments by the Lessee) demand or retake possession of the vehicle until such time as the Lessee remedies the breach or satisfies the Lessor that the breach in respect of which the powers contained herein were exercised does not or will*

5 *not prejudicially affect the vehicle or the rights of the lessor to the vehicle or under any agreement following which the Motor Vehicle shall be redelivered to the Lessee upon payment of the reasonable costs of the Lessor in the exercise of the Lessor's rights hereunder. For this purpose, the Lessor may by its officers or agents enter, where* 10 *necessary by force onto any property occupied by the Lessee and (as the agent of the Lessee) on any other property which the Lessee might enter upon where the vehicle may be or be supposed to be; and/or" …*

A clear reading of this entire provision shows that after the thirty days' notice, the 15 Lessor/Applicant could repossess the vehicle "**until such a time as the Lessee remedies the breach or satisfies…following which the motor vehicle shall be redelivered to the Lessee upon payment…".** The clause goes on further to state that **" for this purpose( repossession of the vehicles), the Lessor may by its officers or agents enter, where necessary by force…"**

- 20 The excerpts of the clause that I have highlighted mean that whereas the Applicant could use any means to repossess the vehicles, entering into a new master lease agreement with M/s Goldline shouldn't have been done. Even after the lapse of the thirty days' notice, the Respondent should have been given the opportunity to remedy the breach or satisfy some conditions and upon the - 25 Applicant being satisfied with the undertakings made by the Respondent, the vehicles would be redelivered to the Respondent.

Secondly, I do not agree with the Applicant that there was no need to obtain any court or instrument from an arbitral tribunal because the agreement was self-

5 executing and that in any event, after the thirty days' notice lapsed, the agreement terminated.

Clause 31(b) on Governing Law, Dispute Resolution and Arbitration of the Master Lease Agreement dated 11th December 2020 constitutes an arbitration agreement between the Parties. This Agreement allows them to commence arbitration to

- 10 resolve disputes that arise between the parties. The Republic of Uganda in the year 2011 adopted the United Nations Commission on International Trade Law (UNCITRAL) model law on arbitration. This law recognizes parties' arbitration agreements as presumptively separable from the contract in which it is contained. One of the consequences of such separability is that it allows an arbitrator or - 15 tribunal to find that the underlying agreement in which the arbitration clause is contained is invalid without at the same time invalidating the arbitration clause itself and thereby depriving the arbitrator or tribunal of jurisdiction. See the case decision of Dr. Mukundakam Sharma J, in the Supreme Court of India **Arbitration Petition No. 13 of 2017: M/s Everest Holding Ltd. Versus Shyam Kumar** 20 **Shrivastava & Ors.**

I therefore find that the Master Lease Agreement is not a self-executing agreement. The Arbitration Agreement between the parties is still valid and separate from the Master Lease Agreement. The Respondent in a letter dated 5th March 2024 wrote a letter to the Chairman of Chartered Institute of Arbitrators –

25 Uganda Branch requesting for the appointment of a single arbitrator to adjudicate the dispute between the Parties. This request should be followed up by both parties.

Page **24** of **26**

- 5 In light of the above findings, court also holds that the acts of the Applicants of repossessing the vehicles and leasing them to another entity were illegal and unlawful. To this end, I am in agreement with the submissions of learned counsel for the Respondent that once an illegality is brought to the attention of court it overrides all questions of pleadings and the merits of the issues of the application - 10 need not be inquired into as they arise from a nullity (**see Musoke Mike & Anor versus Kalumba James – Revision Cause No. 09 of 2019** and M**akula International Limited versus His Eminence Cardinal Nsubuga & Anor, Civil Appeal No. 4 of 1981).**

I also do not find it necessary for court to pronounce itself on whether the 15 Applicant violated the lis pedens rule.

This Application is dismissed with costs to the Respondent.

In respect of **Misc. Cause No. 0027 of 2024**, Court makes the following orders:

- 1. An Order issues against the Respondent, its agents and any persons claiming an interest through the Respondent from taking possession of, impounding, 20 selling, mortgaging, pledging, assigning, transferring, operating, alienating, disposing of, or taking any steps or carrying out any actions capable of affecting or interfering with the Applicant's possession, operation, claim or interest in buses registration numbers UBM 015C, UBM 708F, UBM 711F, UBM 846E and UBM 890F, until the dispute between the Parties is determined through 25 arbitration; - 2. By extension of this order, M/s Goldline Express Services, a third-party whom the Respondent claims to be now in possession of the suit buses, is

Page **25** of **26**

- 5 restrained along with any person(s) claiming an interest through them, or claiming to act on their behalf, from tampering with, selling, mortgaging, pledging, assigning, transferring, operating, moving, alienating, disposing of, or taking any steps and or carrying out any such actions capable of affecting, or interfering with the claims or interests of the Applicant in buses Reg, No.s 10 UBM 015C, UBM 708F, UBM 711F, UBM 846E and UBM 890F, until the dispute between the parties is determined through arbitration; and - 3. Each party shall bear their own costs. - 15 Given my findings in respect of this Application and the Orders made in respect of Misc. Cause 0027 of 2024, the Parties are encouraged to commence the arbitration process without further delay; and if possible conclude the same within a period of thirty days. This is because the Court Orders issued in Misc. Cause 0027 of 2024 affect a thirty party who is not privy to the dispute between the Applicant and 20 Respondent.

Dated and signed at Kampala this **22nd day of April 2024.**

25 **Harriet Grace MAGALA Judge**

Delivered online (ECCMIS) this **30th day of April 2024.**