Kabale Housing Estates Tenants Association v Kabale Municipal Local Council [2013] UGSC 19 (18 December 2013)

# Kabale Housing Estates Tenants Association v Kabale Municipal Local Council [2013] UGSC 19 (18 December 2013) [ Share this document on WhatsApp opens in new tab __](https://api.whatsapp.com/send?text=Kabale+Housing+Estates+Tenants+Association+v+Kabale+Municipal+Local+Council+%5B2013%5D+UGSC+19+%2818+December+2013%29+-+https%3A%2F%2Fulii.org%2Fen%2Fakn%2Fug%2Fjudgment%2Fugsc%2F2013%2F19%2Feng%402013-12-18) [ Share this document on X opens in new tab __](https://twitter.com/intent/tweet?text=Kabale+Housing+Estates+Tenants+Association+v+Kabale+Municipal+Local+Council+%5B2013%5D+UGSC+19+%2818+December+2013%29+-+https%3A%2F%2Fulii.org%2Fen%2Fakn%2Fug%2Fjudgment%2Fugsc%2F2013%2F19%2Feng%402013-12-18) [ Share this document on Facebook opens in new tab __](https://www.facebook.com/sharer/sharer.php?u=https://ulii.org/en/akn/ug/judgment/ugsc/2013/19/eng@2013-12-18) [ Share this document on LinkedIn opens in new tab __](https://www.linkedin.com/sharing/share-offsite/?url=https://ulii.org/en/akn/ug/judgment/ugsc/2013/19/eng@2013-12-18) [ Share this document by email __](mailto:?subject=Take%20a%20look%20at%20this%20document%20from%20ULII:%20Kabale%20Housing%20Estates%20Tenants%20Association%20v%20Kabale%20%E2%80%A6&body=https://ulii.org/en/akn/ug/judgment/ugsc/2013/19/eng@2013-12-18) [ Download RTF (1.7 MB) ](/en/akn/ug/judgment/ugsc/2013/19/eng@2013-12-18/source) Toggle dropdown * [Download PDF](/en/akn/ug/judgment/ugsc/2013/19/eng@2013-12-18/source.pdf) Report a problem ##### Is there something wrong with this document? Problem category *Incorrect informationMissing informationNo PDF downloadDocument is emptyDocument is not accessible on my deviceOther What's the problem? * Your email address * CancelReport problem __ * Share * [ Download RTF (1.7 MB) ](/en/akn/ug/judgment/ugsc/2013/19/eng@2013-12-18/source) * [Download PDF](/en/akn/ug/judgment/ugsc/2013/19/eng@2013-12-18/source.pdf) * * * * * Report a problem __ ##### Kabale Housing Estates Tenants Association v Kabale Municipal Local Council [2013] UGSC 19 (18 December 2013) Copy citation * __Document detail * __Related documents * __Citations \- / 1 Citation Kabale Housing Estates Tenants Association v Kabale Municipal Local Council [2013] UGSC 19 (18 December 2013) Copy Media Neutral Citation [2013] UGSC 19 Copy Court [Supreme Court of Uganda](/en/judgments/UGSC/) Judgment date 18 December 2013 Language English Summary ###### Flynote * Company Law Read full summary __ ##### Ask AI Ask questions and understand this document faster using AI. __Ask AI * * * Skip to document content 1. **THE REPUBLIC OF UGANDA** **IN THE SUPREME COURT OF UGANDA AT KAMPALA** **CIVIL APPLICATION NO.15 OF 2013** **KABALE HOUSING ESTATETENANTS ASSOCIATION LTD :::::::::::::::::::::::** **·APP****LICANT** **..............................****.****................•.......** _Application from th_ _e_ _d_ _e_ _cision and ord_ _e_ _rs of the Court of App_ _ea_ _l_ _in_ _Ci_ _v_ _il r_ _e_ _f_ _eren_ _c_ _e_ _No.9_ _4 of_ 2013, _(Kir_ _y_ _ab_ _w_ _ir_ _e_ _, Kakuru and Tibat_ _e_ _m_ _w_ _a JJA) dat_ _e_ _d_ _9th_ _S_ _e_ _p_ _tem_ _b_ _er 2_ _01_ _3)_ _RULING OF C.N.B. KITUMBA J.S.C_ This application is brought by Notice of Motion under Rules 2(2), 6(2) (b) and 43 of the Judicature (Supreme Court Rules) Directions. 1. _An interim order be granted staying execution of the orders of Co_ _urt of_ _Appeal in Civil Reference No.94 of_ 20 13. 2. _Costs of this application are provided for_ _._ The application is supported by the affidavit of Byarugaba John deponed to on 2nd October 2013.The application is also supported by the affidavit of David Katabarwa deponed to on 2nd October 2013. There is a supplementary affidavit in support deponed to by Byarugaba John on 23rd October, 2013. There are two affidavits in reply; one is by Augustine Bujara, Town Clerk of Kabale Municipal Council and the second one by his Deputy Reuben Ntegyerize. Both affidavits were sworn on 28th October, 2013. The affidavit of Mpirirwe Simpson, the secretary of the applicant company was sworn on 11th November, 2013 is in opposition of the application. The grounds of this application are that; 1. _**The Applicant has lodged**_**a** _**notice of a**_ _**p**_ _**peal in this Honourable**_ _**cou**_ _**rt**_ _**and filed an application for stay of exe**_ _**c**_ _**ution of the Court of A**_ _**ppe**_ _**al**_ _**orders in Civil Reference No.94 of 2013 which is still pending an**_ _**d th**_ _**e**_ _**decision will be rendered nugatory if**_ _**t**_ _**he application succeed**_ _**s aft**_ _**er**_ _**execution.**_ 2. _**The appeal has high chances of success.**_ 3. _**The members of the Applicant Company will individually**_ _**an**_ _**d**_ _**collectively suffer irreparable damage if the houses are sold befo**_ _**re th**_ _**e**_ _**application for**_**a** _**temporary injunction is decided.**_ 4. _**It is just and equitable that the application for an interim ord**_ _**er b**_ _**e**_ _**granted.**_ Kabale Housing Estate Tenants Ltd, the applicant, is a company limited by guarantee and was registered on 28th April 2003.The company was formed by the residents of government houses known as Kabale Housing Estate who according to the Government Divesture Policy were to benefit when the respondent sells the houses. The Association's main objective is pursuing individual and collective rights. Kabale Municipal Local Government Council, the respondent, without following the Government Divesture Policy decided to sell the houses on open market without giving priority to the members of the applicant company as set out in the sale guidelines circular. The applicant through its lawyers _MIS_ Rwaganika & Co. Advocates filed a suit in the High Court at Mbarara and applied for prerogative 5 orders of mandamus and prohibition which were successfully granted. Later the trial judge reviewed the said orders. The applicant aggrieved with the review decision appealed to the Court of Appeal. According to paragraph 14, 15 and 16 of the affidavit in support of the application by Byarugaba John, a letter was written by a person purporting to be a chairman of 10 the applicant on 10/09/2007 withdrawing instructions from Mr. Rwaganika. The letter is attached to his affidavit as Annexture "K"l. On the same date other members of the applicant wrote to the same advocate dissociating themselves with the letter withdrawing instructions and the letter is Annexture "K" 2 to Byarugaba's affidavit. 15 Annexture LT' attached to the same affidavit is a letter written by Byamukama withdrawing instructions from Mr. Rwaganika. According to paragraph 17 of Annexture "M" to the affidavit is a letter dated 27/07/2009 appreciating Mr. Rwaganika's work and requesting him to continue. Augustine Bujara deponed in paragraph 3 of his affidavit that the application has 20 been overtaken by events. **In** paragraph 4 he avers that Civil Appeal No. 24 of 2008 was terminated /withdrawn on 27/07/2013 unconditionally and parties agreed to abide by the memorandum of understanding that was executed on 24th July. The following documents are attached as Annexture "A" to his affidavit. The 25 consent judgment, memorandum of understanding, minutes of the applicant's meeting and the company resolution dated 17th May 2013. On 9th September 2013, when the parties appeared before the Court of Appeal the court noted the consent judgment and accordingly dismissed Civil Application _No.6 of_ 2008 _and Civil Reference No.94 of_ 2073 between the same parties on the 30 ground that they had abated upon entry of the consent termination/ withdraw. 5 Augustine Bujara averred in paragraph 6 of his affidavit that he had been informed by the Company officials that the applicant had not instructed _Mis_ Rwaganika and Co Advocates to take any further legal action after entry of the consent judgment in _Civil Appeal No_ _.__24 of 2008._ That the respondent had already given lease offers to the members of the applicant. 10 When this application came for hearing on 12th November 2013, Mr. Henry Rwaganika appeared for the Applicant and Mr. Arthur Mwebesa appeared as counsel for the Applicant as well. Mr. Philip Mwaka, Principal State Attorney, together with Mr. Jonathan Bwogi of _MiS_ Bwogi & Co. Advocates appeared for the Respondent. 15 Mr. Mwebesa raised a preliminary point of law on who is the duly instructed counsel for the Applicant. He stated that Mr. Rwaganika is not instructed to represent the Applicant. He further stated that instructions to represent the Applicant were withdrawn from Mr. Rwaganika from 10th September 2007.He relied on a letter from the Chairman of Kabale Housing Estates Tenant Association 20 Ltd marked annexture "C" to the affidavit of Simpson Mpirirwe .This letter was received by counsel Rwaganika. Mr. Mwebesa also relied on the minutes of the company meeting held on 17th May 2013 further confirming that instructions were withdrawn from Mr. Rwaganika. The minutes of the meeting and the resolution were attached to the affidavit in reply by Augustine Bujara. He contended that by 25 special resolution; dated 23rd October 2013 Mr. Mwebesa was instructed to represent the Applicant Company. Mr. Mwaka, Principal State Attorney as officer of court also raised the issue of legal representation relying on the authority of **City African Textile Shop (U) Ltd****v****J****an****Mohamed Ltd HMA No.0437 of 2002**(Unreported). He submitted that counsel 30 cannot represent a company without its resolution authorizing himlher to do so. 5 The learned Principal State Attorney submitted that, therefore, all the actions of Mr. Rwaganika and Rwaganika & Co. Advocates are a nullity since they were conducted without instructions in form of a resolution. He stated further that what counsel did was against the resolution of the company. He prayed that the instant application before court has no standing and is, therefore, incompetent and should 10 be dismissed. He prayed that Mr. Rwaganika should pay the costs of this Application personally. **In** reply, Mr. Rwaganika stated that he had instructions by company resolution although he had not brought it in court. He filed the civil suit on behalf of the company in the High Court at Mbarara. He stated further that the instructions were 15 never withdrawn from him. He referred to the affidavit in support of the Application deponed by Byarugaba John in particular annexture _"__Kl".The_ letter in paragraph 1 stated; He argued that this was not supported by a resolution of the company appointing 20 him as counsel. Mr. Rwaganika contended that the application before this court was competent because he had full instructions to represent the company from 2003 up to date. He argued that he had never received any notice of change of advocates from Mwebesa & Co. Advocates that their firm was representing the applicant. He 25 prayed that the application should be heard on its merits and he should not be made to pay costs personally because he had full instructions. I have considered the submissions of both counsel. The main issue for determination is whether Mr. Rwaganika was duly instructed to represent the Applicant. 5 The Learned Principal State Attorney cited the case of City African Textile Shop (U) Ltd v Jan Mohamed Ltd (supra).The case deals with the issue of representation and the basis on which counsel represents a client. The case laid down the principle that counsel represents a company as a client on the basis of a company resolution and if counsel proceeds without a resolution of a company, all his actions are a 10 nullity. Mr.Mwaka correctly submitted that all the actions of Mr. Rwaganika and Rwaganika & Co. Advocates are a nullity since they were conducted without instructions in the form of a company resolution. Mr. Rwaganika might have had instructions the first time he represented the Applicant Company in the High Court at Mbarara. These instructions were later 15 withdrawn as seen from the special resolution filed by the Applicant Company with the Registrar of Companies on 17th May 2013 which was duly presented in court during the hearing of this Application. From the affidavit in support of Byarugaba John, Mr. Rwaganika received different instructions. Some shareholders of the applicant were requesting him to withdraw from the appeal and others telling him 20 to pursue the appeal. That notwithstanding Mr. Rwaganika was aware of the uncontroverted evidence contained in the affidavits of Augustine Bujara and Mpirirwe Simpson. According to annexture "E" to the affidavit of Mpirirwe the applicant had reported Mr. Rwaganika to the Secretary Law Council for acting without instructions. 25 The consent judgment between the applicant officials, the memorandum of understanding, minutes of the extra ordinary meeting and the company resolution were attached thereto. The legal position must have been very clear to Mr. Rwaganika that instructions had been withdrawn from him. _"Any application to or appearance or_ act _in any court requi_ _red or_ _authorised by law to be made or done by_ a _party in such court may_ _, except_ _where otherwise expressly provided by any law for the time being_ _in force_ _,__be made or done by the party in person, or by his or her recognise_ _d agent_ _,__or by an advocate duly appointed_ to _act on his or her behalf_ _;__e_ _xcept tha_ _t_ _any such appearance shall, if the court_ so _directs, be made by the_ _party in_ _person."_ 10 Additionally, Regulation 2 (1) of the Advocates (Professional Conduct) Regulations S.1 267-2 provides; _"No advocate shall act for any person unless he or she has_ _receive_ _d_ _instructions from that person or his or her du_ _l_ _y authorised agent_ _.__"_ In cases where the instructions have been withdrawn, counsel cannot claim to have 15 instructions to represent the client. Regulation 3(1) of the Advocates (professional Conduct) Regulations 5.1 267-2 provides; _"An advocate may withdraw from the conduct of_ a case _on behalf_ _of_ a _client where the client withdraws instruction_ _s_ _from the advocate.__"_ 20 A suit brought without instructions is incompetent. See: Buikwe Coffee Ltd (1962) EA 327.Counsel must thus appear in court with full instructions and authority from his client. Failure to do so, an advocate will be acting on his own and will not be entitled to any costs. 25 In the case of Danish Mercantile Co.LTD V Beaumont & Anor [1951] Ch C.A 680 Jenkins L.J at page 687 stated the position as follows: _"I think that the true position is simply that_ a _solicitor_ _who star_ _ts_ _proceedings in the name of_ a _company without verifying whet_ _her he h_ _as_ _proper authority_ so to _do, or under an erroneous assumption of_ _authori_ _ty_ _30_ _does_ so at _his own peril, and that,_ so _long_ as _the matter rests_ _there, th_ _e_ _action is not properly constituted. In that sense, it is_ a _nullity_ _and can b_ _e_ _stayed at any time, provided that the aggrieved party does not undul_ _y delay_ _his application; but it is open at any time to the purported plaintiff to_ _ratify_ _the act of the solicitor who started the actio_ _n_ _to adopt the proceed_ _i_ _n_ _gs, to_ _approve all that has been done, then in accor_ _d_ _ance with the ordinary_ _law o_ _f_ _principal and agent and in accordance with the ordinary doctri_ _ne o_ _f_ _ratification, in_ my _view, the defect in the proceedings as orig_ _inall_ _y_ _constituted is cured, and it is no longer open to the defendant to obje_ _ct on_ _the ground that the proceedings thus ratified and adopted were_ _,__in th_ _e firs_ _t_ _instance, brought without authority"._ , I 15 Clearly the company is not willing to ratify the acts of Mr. Rwaganika, thus rendering the application for stay of execution filed by him incompetent. Mr. Rwaganika was only instructed by a few members of the company to represent them and not the company itself. As counsel he should have known how to proceed to represent the minority shareholders and not the company. 20 Where a wrong has been done to the company and an action is brought to restrain its continuance, or to recover the company's property or damages or compensation due to it, the company is the true plaintiff. See: Gray Vs Lewis [1873]8 Ch App 1035.The appropriate agency to start an action on behalf of the company is the board of directors, to whom the power is delegated as to manage the affairs of the 25 company. See: United Assurance _Co._ Ltd v A.G [1995] KALR 308. However, in instances where a shareholder is aggrieved with what the directors or majority shareholders did, the share holder could bring a derivative suit on behalf of the minority. I Mr. Byarugaba John as a member of the company should have brought a derivative suit against the company and not instructed counsel Rwaganika to make the 2. 5 application because his instructions as counsel for the applicant had ceased when the applicant passed the special resolution appointing Mr. Mwebesa as its counsel. Having considered the above authorities and submissions of counsel, I uphold the preliminary objection that counsel Rwaganika did not have instructions and the 10 only duly instructed counsel is Mr. Mwebesa. The application having been filed by counsel without instructions, it is, therefore, incompetent in law. **In** the result I uphold the preliminary objection and the application for interim stay of execution is here by dismissed. I am of the considered view that there has been a continuous misunderstanding between the individual shareholders which could have been solved through negotiation and mediation. It has been shown from affidavit evidence that different members of the applicant gave Mr. Rwaganika contrary instructions. Such 20 misunderstanding might have unfortunately confused Mr. Rwaganika on the issue of the legal representation. Each party should, therefore, bear its own costs. Dated at Kampala this 18th day of ... December 2013 c::-- **C.N.B KITUMBA** **JUSTICE OF THE SUPREME COURT** #### __Related documents #### More documents like this one ▲ To the top >