1.

THE REPUBLIC OF UGANDA

IN THE SUPREME COURT OF UGANDA
AT KAMPALA
CIVIL APPLICATION NO.15 OF 2013

KABALE HOUSING ESTATETENANTS ASSOCIATION LTD :::::::::::::::::::::::

·APPLICANT
...............................................•.......

Application from the decision and orders of the Court of Appeal in Civil reference No.94 of
2013, (Kiryabwire, Kakuru and Tibatemwa JJA) dated 9th September 2013)

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 Court 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 appeal in this Honourable court and filed an

application for stay of execution of the Court of Appeal orders in Civil Reference

No.94 of 2013 which is still pending and the decision will be rendered

nugatory if the application succeeds after execution.

2 The appeal has high chances of success.

3. The members of the Applicant Company will individually and collectively suffer

irreparable damage if the houses are sold before the application for a temporary injunction is

decided.

4. It is just and equitable that the application for an interim order be 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 ap plication 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 12 th 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 10 th 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 issu e of legal

representation relying on the authority of City African Textile Shop (U) Ltd v Jan

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 reso lution 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 17 th 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 required 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 recognised agent, or by an
advocate duly appointed to act on his or her behalf; except that 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 received instructions
from that person or his or her duly 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 instructions 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 starts proceedings in
the name of a company without verifying whether he has proper authority so to
do, or under an erroneous assumption of authority
30 does so at his own peril, and that, so long as the matter rests there, the action is
not properly constituted. In that sense, it is a nullity and can be
 stayed at any time, provided that the aggrieved party does not unduly delay
his application; but it is open at any time to the purported plaintiff to ratify
the act of the solicitor who started the action to adopt the proceedings, to
approve all that has been done, then in accordance with the ordinary law of
principal and agent and in accordance with the ordinary doctrine of
ratification, in my view, the defect in the proceedings as originally constituted
is cured, and it is no longer open to the defendant to object on the ground that
the proceedings thus ratified and adopted were ,in the first 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