UMEME Limited & Another v Makubuya T/A Polla Plast (Miscellaneous Applications 1, 11, 12, 13 of 2024 & Constitutional Reference 2 of 2024) [2025] UGSC 7 (24 January 2025)

# THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT KAMPALA [CORAM: CHIBITA, JSC] MISC. APPLICATION NO. 11 OF 2024 MISC. APPLICATION NO. 12 OF 2024 MISC. APPLICATION NO. 13 &15 OF 2024 MISC. APPLICATION NO. 1 OF 2024 CIVIL REFERENCE NO. 02 OF 2024 **[ARISING OUT OF MISC. APPLICATION NO.02 OF 2024]** [ARISING OUT OF CIVIL APPEAL NO. 01 OF 2019]

$\mathsf{S}$

## **BETWEEN**

1. UMEME LIMITED :::::::::::::::::::::::1<sup>ST</sup> APPLICANT/RESPONDENT

**2. STANBIC BANK** UGANDA LIMITED::::::::::::::::::::::::::::::::::::

### AND

#### MAKUBUYA ENOCK WILLIAM $20$ T/A POLLA PLAST::::::::::::::::::::::::::::::::::::

# CONSOLIDATED RULING OF MIKE J. CHIBITA, JSC.

#### **Background**

- Mr. Makubuya William t/a Polla Plast, (Respondent) purchased plastic 25 manufacturing machines from BMK Industries Limited and commenced business on the premises of his landlord BMK Industries Limited. This was between March and November, 2008. The Respondent and his landlord agreed that the Respondent pays his electricity bills on the account of BMK Industries - Limited. Later on, the Respondent caused a change of the account names into 30 the names of his business Polla Plast but was surprised to be given an


$\mathsf{S}$ outstanding bill of electricity of UGX 155,183,658/= by UMEME Limited (Applicant).

Subsequently, the Respondent signed a deed of acknowledgement of the debt in which he undertook to settle the electricity bill and reconnected the electricity, albeit illegally. This came to the notice of UMEME Limited and the electricity was disconnected, a charge for causing energy loss and fines were imposed on the 10 Respondent. Due to the disconnection of the power supply, the Respondent suffered financial constraints and could not keep up with all his financial obligations including paying rent to his landlord. As a result, his landlord attached his machines which were subsequently sold off under a Court order, 15 resulting into the collapse of the Respondent's business.

It is against the above background that on 6<sup>th</sup> November, 2012 the Respondent instituted *Civil Suit No.* 534 of 2012 against UMEME Limited, which was held in favour of the Respondent. Aggrieved by the said decision, UMEME Limited appealed to the Court of Appeal vide Civil Appeal No. 216 of 2015 wherein the appeal was dismissed and the judgment of the trial Court upheld. The Court of Appeal issued further orders concerning general damages and interest. Aggrieved by some of the aforementioned remedies, the Respondent appealed to the Supreme Court vide Civil Appeal No. 1 of 2019 which succeeded. On 22<sup>nd</sup> February, 2024, in execution of the decree of the Supreme Court, the Respondent

25 vide Supreme Court Misc. Application No. 02 of 2024, sought garnishee orders against Stanbic Bank (U) Ltd (the Applicant in *Misc. Cause No. 60 of* $2024).$

On 7<sup>th</sup> March, 2024, a garnishee order nisi was granted by the Learned Registrar, Her Worship Nalukwago Harriet in the presence of both parties. This was amended on 13<sup>th</sup> May, 2024. On 15<sup>th</sup> May, 2024, a garnishee order absolute was 30 issued.

Aggrieved by the said order, UMEME Limited filed Supreme Court Civil **Reference No. 02 of 2024** vide a letter dated 14<sup>th</sup> May, 2024, challenging the


orders issued by the Learned Registrar in Supreme Court Misc. Application $\mathsf{S}$ No. 02 of 2024.

Subsequently UMEME Limited also filed **Supreme Court Misc. Application No.** 11 of 2024 and Supreme Court Misc. Application No. 12 of 2024 seeking stay and interim stay of execution of the orders in Supreme Court Misc.

Application No. 02 of 2024 pending the determination of Supreme Court Civil 10 Reference No. 02 of 2024.

Stanbic Bank (U) Limited aggrieved by the aforementioned orders, also filed Supreme Court Civil Application No. 01 of 2024 seeking the same orders sought in Misc. Cause No. 60 of 2024 before the Commercial Court that; the garnishee Order nisi issued on 13<sup>th</sup> May, 2024 and made absolute on 15<sup>th</sup> May, 15 2024 in respect of account numbers; 9030013670367, 9030008293650. 9030008774470, 9030008795206, 9030005662752, 9030005662930 and 9030008019826 held in the Applicant Bank is a nullity, consequently, the garnishee order absolute dated 15<sup>th</sup> May, 2024 be set aside.

- In Supreme Court Civil Appeal No. 01 of 2019 the Court granted the following 20 orders; - a) Special damages equivalent to USD 2,519,557 as the proved cost of the machinery subject to a depreciation rate over the number of years the machinery was put to use before being attached and sold. - b) General damages in the sum of UGX 300,000,000/ $=$ subject to a deduction of UGX $25,586,300$ /= being the outstanding electricity bill. - c) Interest at the rate of 20% per annum on the award of general damages from the date of the Court of Appeal judgment until payment in full. - d) Exemplary damages in the sum of $UGX$ 100,000,000/=.


The Applicant paid the Respondent UGX $663,691,473$ = in satisfaction of the 5 amount awarded as general damages inclusive of interest and exemplary damages.

The Applicant informed the Respondent that the sum of USD 2,519,557 awarded as special damages was to be subjected to a depreciation rate as ordered by the Court before payment which depreciation rate was yet to be determined.

The Respondent was unwilling to subject the amount to a depreciation rate and instead instituted garnishee proceedings vide Supreme Court Misc. Application No. 02 of 2024 seeking to attach the entire amount of USD 2,519,557 without subjecting it to a depreciation rate for the number of years the machines were put to use before they were sold off as ordered by the Court.

The Learned Registrar issued a garnishee order nisi for the entire amount claimed in Supreme Court Misc. Application No. 02 of 2024 without consideration of the Supreme Court's order to subject the amount to a depreciation rate.

The Applicant opposed **Supreme Court Misc. Application No. 02 of 2024** and 20 filed an affidavit in reply, informing the Court that the application was premature considering the need to determine a depreciation rate to be subjected to the amount over the number of years the machines were put to use before they were sold prior to payment.

The Applicant further informed the Court that it had sought an expert opinion $25$ from KPMG, one of the leading audit firms to assist in the determination of a depreciation rate and it had issued a report indicating its findings and advising that according to the Respondent's own audited accounts, he had been depreciating the machines at the rate of 20% per annum. The report subjected the same depreciation rate to the machines and returned a value of USD 138,058 30

as the amount payable.


Subsequently, the garnishee order nisi that had been granted was amended to $\mathsf{S}$ attach the sum of USD 138,058 as indicated in the KPMG report; the Applicant paid this sum to the Respondent and the garnishee order nisi was vacated by the Learned Registrar.

After payment of the USD 138,058, the report from the Ministry of Works and Transport was issued. 10

In her ruling on 9<sup>th</sup> May, 2024, the Learned Registrar disallowed the report by the Ministry of Works and Transport and then issued a garnishee order nisi of half of the amount of USD 2,519,557 less the USD 138,058 that had been paid, making it USD 1,190,750 to partially satisfy the decree in **Supreme Court Civil**

Appeal No. 01 of 2019 pending the production of a final report from the 15 Ministry of Works and Transport.

A flurry of activity ensued culminating in the current application and another application that ended up in the Commercial Court.

# Representation

On 21<sup>st</sup> August, 2024 when the matter was heard before me the representation 20 was as follows:

Mr. Noah Mwesigwa, Mr. Andrew Kibaya and Mr. Nicholas Mwaseme represented Umeme Limited, Mr. Michael Mafabi and Mr. Rodney Nganwa represented Stanbic Bank Uganda Limited while Mr. Enock Makubuya, represented himself. Mr. Rogers Mugisha, Legal Officer, Umeme Limited was also present.

After meeting the parties and their Counsel trying to assess areas of commonality and possibility of compromise and consolidation, it became clear that the matter could not be resolved amicably.

The parties were thereafter directed to file their written submissions to supplement the pleadings already on file, which they did and the same have been 30 considered by this Court.


#### **Court's Determination** $\mathsf{S}$

Part of the reason I engaged the parties and their Counsel prior to setting down the matter for written submissions was because of the matter being in both the Supreme Court and the Commercial Court.

It was also clear that the major issue for determination was depreciation. Who was the right body to carry it out and how much was it? 10

Thankfully the Commercial Court disposed of the matter as evidenced by an excerpt from the ruling of Patience Rubagumya, J:-

"Therefore, it is my considered view that the matters in issue in the present applications are directly and substantially in issue in **Supreme Court Civil** Reference No. 02 of 2024 and Supreme Court Civil Application No. 01 **of 2024**. This is in contravention of the lis pendens rule.

"Also, the Applicants herein do not dispute the fact that both the **Supreme** Court Civil Reference No. 02 of 2024 and the applications arising therein as well as Supreme Court Civil Application No. 01 of 2024 are pending before the Supreme Court and further that efforts are ongoing in the Supreme *Court to try and resolve the matter amicably.*

"In light of the above and the fact that the matters in issue in this Court are directly and substantially in issue in the Supreme Court; to avoid issuing contradictory decisions and encouraging the existence of multiple proceedings, it is in the interest of justice that the matters in issue are determined by the Supreme Court.

"In the premises, for the above reasons and pursuant to Section 37 of the Judicature Act and Section 98 of the Civil Procedure Act; Misc. Cause No. 47 of 2024 and Misc. Cause No. 60 of 2024 are hereby dismissed."

The matter therefore being squarely before the Supreme Court and having 30 listened to Counsel for the Applicant, UMEME Limited, and to the Respondent,


$\mathsf{S}$ Mr. Makubuya Enock William, and having considered the reports from KPMG and that of the Ministry of Works and Transport on depreciation,

I hereby make the following findings:

- 1. Litigation must come to an end sooner or later. The sooner the better. - 2. Court should always take into consideration expert opinions. Ultimately, however, Court is the Expert of Experts. This is more so where there are two conflicting expert opinions. - 3. Depreciation cannot and should not serve to whittle away the entire amount that is the basis of the depreciation. - 4. It is important to always keep in mind issues of fairness and justice even when considering matters of depreciation. - Consequently, I make the following orders: - 1. All the applications pending before the Supreme Court arising out of the execution of the judgment in Civil Appeal No. 01 of 2019 are hereby consolidated. - 2. By this ruling all the consolidated applications, in this matter, pending before this Court, are hereby dismissed save for Misc Application No.1 of 2024 and Civil Reference No.02 of 2024 which partially succeeds as against the principal sum. - 3. That a depreciated amount of USD $2,000,000/$ = is awarded to the Respondent. - 4. The Garnishee Order Absolute issued in respect of USD $1,190,750/$ = be honoured accordingly by Stanbic Bank Uganda Limited. - 5. The balance of the depreciated amount, to wit, USD $671,192/$ = be paid by the Applicant, UMEME Limited. This amount being USD 2,000,000 less


$10$

- USD $138,058$ /= already paid and less the amount in number (4) above $\mathsf{S}$ already garnished. - 6. I make no order as to costs.

Dated, signed and delivered electronically via ECCMIS this 24<sup>th</sup> day of January, 2025. $10$

$\frac{1}{5}$

Mike J. Chibita

JUSTICE OF THE SUPREME COURT