Sam Sewanyana and Another v Nicholas Were (Civil Reference No. 79 of 2013) [2015] UGCA 2030 (15 January 2015)

# <sup>5</sup> THE REPIJBLIC OF UGANDA

IN THE COURT OF APPEAL

#### OF UGANDA

CIVIL REFERENCE NO. 79 OF 2013

<sup>10</sup> ARISING OU| OF CIVIL APPIICAiDil TIO. 779 OF 2O1E ARHilC OU| CIVIL APPHL IVO. 22 OF 2O7E ARtSilVO OU| 0F MISC. APpLlCATtOil NO. '69 0F 2072 ARISINO OUT OF COMPANY CAUSE NO.44 OF 2OO7 (ARtstile FROfri CtVtL SU|T tVO. 719 0F 2007)

| 1. SAM SEWANYANA | | |------------------------|--------------| | 2. MR. CARLSON NGOLOBE | APPLICAINTS. |

# vs

20 5. MR. NICHOIAS WERE RESPONDNENT

# CORAM: HON. MR. JUSTICE A. S NSHIMYE, JA

# RULING.

30 This is an appeal bV way of a reference from the decision of the Registrar of this Court granting interim orders as praved arising from High court companv cause No. 44 oJ 2OO7 where the respondent sought the removal of Directors and challenged his own removal as Chairman and Director of Coodman Agencies.

For that reason the learned Registrar misdirected himself on the facts which resulted in granting a relief that was not deserving in the circumstances.

The reference is therefore allowed and the Order of the Registrar is set aside.

Costs will abide the outcome of the appeal.

On perusal of the relevant court files, I have found the substantive application and appeal to be trial ready. I direct the Registrar to fix them for hearing as soon as possible preferably, together on the same day.

DATED THIS....... $15^{16}$ ....................................

HON. JUSTICE A. S. NSHIMYE, **JUSTICE OF APPEAL**

$|S_0|$ , $|S|$ FUETTRE Semuyaber for respondent<br>Respondent in ourl<br>Annin Mooting court denk.<br>CB Amering delivered.<br>Beforese

40 The above company application was dismissed by Justice Kibuka Musoke who found that the respondent's removal was in accordance with the Articles of the Companv. The respondent applied for stay of execution which application was dismissed by Justice Kabito J. He sought leave to appeal against the decision of Justice Kabito and filed an application seeking an interim order of stav of execution of the juclgment of the high Court. He also prayed that an injunction be granted to restrain registration of the said High Court judgment and orders with the Registrar of companies pending the hearing and final disposal of the substantive application for stav of execution.

He also sought an injunction restraining the respondents (now appellants) from management of M/S ooodman Agencies Ltd. before the Registrar Court of Appeal His Worship E. O. Kisawuzi.

50 The Notice of Motion laid out the grounds for the application and more were stated in the accompanying affidavit.

The Registrar granted the application with set conditions.

The applicants being dissatisfied by the decision of the Registrar of the Court of Appeal appealed by reference on the grounds that:-

# 1. The learnecl neglstrar erroneously entettainecl an appllcatlon and orclerecl for an lnterlm injunction to

issue restraining the applicants from takinE over the management of Oooclman Agencies LCd.

# 2.1he learnecl Registrar erroneously orderecl for malntenance of status quo.

65 They prayed for orders that this court sets aside the Registrar's orders with costs.

### REPRESENTATION.

70 Mr. Michael okecha represented the applicants while Mr. okuku and Mr. Semuvaba were for the respondent.

# SUBMISSIONS FOR THE APPLICANTS.

t) Learned Counsel okecho submitted that the two learned judges in the High Court found that the present applicants were duly appointed and were in stewardship of the company, Justice Kibuka Musoke found that the respondent was properly removed. The Registrar reversed the clecision of two courts with orders whose effect was to challenge the status quo which was against the known principles of the grant of an injunction.

He contended that the respondent had never appliecl for an injunction against his removal untilthis court granted one.

85 He prayed the court to set asicle the orders as granted bV the Registrar with costs.

#### SUBMISSIONS FOR THE RESPONDENT.

Mr. Semuyaba cited practice Direction No. 1 of <sup>2004</sup> pursuant to Section 41 n of the Judicature Act which gives the Registrar powers to handle those kinds of applications.

He stated that once the Registrar has decicted the apptication, he cannot be challenged by way of reference. He referred to the cases of Butera Edward v. Mutalemwa Godfrey Civit Reference No. 70 of 2013, Burundi Tohacco Co. S. A. R. L, Leaf Tobacco & commodity (u) Ltd. v. British American Tobacco (U), Civil Reference No. 22 of 2010, Francis Mansi Micah v. Nuwa Walakira s.c.c Application No. I of 1990, Mandela Auto spares v. Marl(eting hformation Systems Lttl, Coult of Appeal Reference No. 74 0f 2008 and wilson Mulibi v. James Semusambwa SupremenCivil Application No.g of 2003 which emphasise the powers of the Registrar. 95 100

Counsel also referred to the case of Souna Cosmetics ttd. v. The Commissioner customs URA & Another, Misc. Application No. 424 ot 2011 which was to the effect that interim orders are there to preserve the respondent's right of appeal. 105

110 He contendecl that it was not necessary to consider whether the substantive application would succeed. That once the Registrar founcl out that there was a serious dispute and the matter is still pursued on appeal, the status quo should be maintained.

115 According to counsel, the Registrar granting an interim order did not mean reversing the High Court decision.

120 He submitted that the Registrars orders did not overturn the decision of the judges and referred to pages 59, 60 and 62 on the status quo. There were two letters to the Registrar Ceneral which were to the effect that there were conflicts amongst the management that the companv ought to hold a meeting of shareholders to ascertain who the directors are. The Registrar hacl never registerecl the applicants as directors.

r25

He contended that the applicants did not challenge the powers of the registrar to grant an interim injunction pending hearing of the substantive application No. 119 of 2013, arising from civil Appeal No. 22 of 2013. he relied on rule 6(2xb)of the Court of Appeal Rules in support of his submission. That the respondent adduced evidence of the existence of the appeal.

He submitted further that the Registrar's order was only temporary hence parties should wait a decision in the <sup>135</sup> substantive application.

He prayed for a dismissal of the reference and prayed that the Registrars order is upheld.

# 140 SUBMISSIONS !N REJOINDER.

counsel Okuku stated that the status quo talked of was not the correct one since the applicants are not on the company registry; thev are neither shareholders nor directors.

145 Counsel Okecho in rejoinder argued that they were not challenging the powers of the Registrar but the orders as granted bV him which had the effect of overturning the decisions in two courts.

150 He stated that the status quo can be got from the company cause where the respondent seeks to nullify his removal. He acknowleclgecl his removal but challengecl the way it was done which court found otherwise. The applicants were in lawful management both before and after the decision (2006) hence the status quo hacl not changed.

155 Although the respondent relies on the letter by the Registrar Ceneral of the existence of a conflict, the matter went to court and was decided.

He reiterated his earlier praver.

### Findings of court.

### Grounds one and two.

The grounds are reproduced on page 2 and 3 of this ruling. I need not reproduce them again. Court of Appeal (Judicial Powers of Registrars) Practice Direction No.1 of 2004 165 provides:-

"Pursuant to the Court of Appeal Rules Directions 1996" made under Section 41(1) (v) of the Judicature Act, 2000, and in order to ensure expeditious disposal of cases, the 170 powers of Registrars shall include, but not limited to *entertaining matters under the following rules;*

#### 1. Rule 5- Applications for interim orders..."

Any one aggrieved by the decision of the Registrar may refer 175 the matter to a single justice of appeal whose decision may be referred to a full bench (see: Section 12 of the Judicature Act, Cap 13 and Rule 55 of this Court's Rules). This reference therefore was properly brought before me.

An interim injunction is a discretionary order issued by Court for a short time, and usually to a particular date pending determination of the main application. The conditions for the grant are nearly similar to those for granting applications for temporary injunctions. They include:-

$\overline{7}$

(a) That the court has jurisdiction to grant or not to grant the order sought for maintenance of status quo.

That the suit from which the application arises $(b)$ discloses triable issues and is not frivolous and/or vexatious.

(c) That failure to grant the application would render the disputed matter nugatory in a manner that cannot be redressed through an award of damages."

## On the maintenance of status quo.

The respondent in his submission stated that there was a danger of the applicants taking over the management of the company which is the subject matter of the appeal.

- The applicants are already directors of the company whose 205 duties are to run the company and will be held accountable in case of anything. - It was the Registrar's finding that the applicants brought no 210 evidence of their appointment as directors but there is evidence on record of a meeting as held on 18<sup>th</sup> September 2006 where directors controlling 75% of shares appointed them 8

215 as such. There was a resolution which was served on the respondent as annexure "D". There was notification of change 0f directors to the Registrar of Companies which inclucled the applicants.

220 I find that there is no status quo to preserve as argued by the respondent since his legal right as director was determined and even if there is an appeal, it will not take away the clirectorship of the applicants but will be on his removal and propriety of other issues.

230 Further it appears it was agreed by both parties in the court below before Justice B. Kabito that the respondent (Nicholas Were) he granted leave to appeal with the understanding in the background that the pegistrar of companies would register the resolution effecting changes to the company management when the pending appeal is heard and disposed of as recorded in the Registrar's proceedings from submission of learned counsel Semuyaba, in Paragraph "14, 16,17, and 18."

That consent order was therefore intended to preserve the status quo. lt would be abuse of court process to ask this court to preserve in the interim a status quo that is already preserved.

240