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5 THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
COMMERCIAL DIy'ISION "..
CIVIL SUIT NO. 751 OF 2014
BRITISH AMERICAN TOBACCO LIMITED :::::::::::::::::::::::::::::::::::::::: PLAINTIFF
10 VERSUS
- FRED MUWEMA
- HERBERT KIGGUNDU MUGERWA 3.4. (^) BRIANSIRAJ ALIKABA YIZA 15 5. TERRENCE KAVUMA TjA MUWEMA AND MUGERWA ADVOCATES ::::::::::::: DEFENDANTS
BEFORE: HON. DR. JUSTICE HENRY PETER ADONYO JUDGMENT
20 1. Brief facts:
The brief acts relating to this suit are that the Plaintiff was sued by
a collection of 2838 Hoima District based tobacco farmers. These
tobacco farmers were represented by the Defendants as counsel on
record in High Court Civil Suit No. 268 of 2005 (Sedrach
25 Mwijakubi and
..
5 Limited). The High Court delivered its judgment in favour of the
farmers. The Plaintiff was dissatisfied with the judgment of the High
Court and so it lodged an appeal in the Court of Appeal vide Court
of Appeal Civil Appeal No. 50 of 2008; British American Tobacco
Uganda Limited vs Sedrach Mwijakubi & Others. At The Court
10 of Appeal Respondents were still represented by the same law firm of Muwema and Mugerwa Advocates. While the decision regarding the appeal was pending, the Plaintiff ostensibly conducted negotiations with the Respondents farmers through their legal representatives Muwema and Mugerwa Advocates 15 with a view to settle the then pending dispute between themselves and the farmers culminating into the execution of a Deed of Settlement (Exhibit A2) dated 27 th^ July, 2010 was signed wherein the parties agreed that the then Appellant pays the sum of Uganda Shillings Four Billion Six Hundred Million only (Ug. Shs 20 4,600,000,000/=) inclusive of Uganda Shillings Three Hundred Million Only (Ug. Shs. 300,000,000/=) to then then Respondents which amount was to constitute the whole settlement of the dispute
..
.•
5 Appeal No. 1 of 2012; British American Tobacco Uganda
Limited vs Sedrach Mwijakubi & Others. This appeal (Exhibit P4.
was also dismissed by the Supreme Court on 20th^ June 2013 with
the Supreme Court agreeing with the decision of the Co{i~tof Appeal.
The Plaintiff herein then filed a post judgment application in the
10 Supreme Court vide Civil Application No. 7 of 2013 British
American Tobacco Uganda Limited vs Sedrach Mwijakubi &
others in which it was seeking among others a number of
declarations.
The Supreme Court on 10th July, 2014 dismissed the said
15 application as per Exhibit P5 and awarded to the Respondents/
Tobacco Farmers the sum ofUg. Shs.14, 364,358,042/ - with interest
of 15% per annum on daily balances compounded monthly in line
with regulation 11(2) and (3) of the Tobacco (Control and Marketing)
Regulations, S.I 35-1 in addition to advising the Appellant/Plaintiff
20 herein to recover directly the sum of Ug. Shs. 4,300,000,000/=
previously paid to the current Defendants and or any of the
respondents therein the claimed sum of Shs. 921, 195, 924/= arising
from the Settlement Deed.
5 With all these efforts ending in vain, the Plaintiff quickly paid the decretal sum of Ug. Shs.14, 364, 358,042/ - directly to the farmers and thereafter made several demands to the law firm of M/ s Muwema
and Mugerwa Advocates to have refunded^.^ to it the sums~. previously
remitted to it amounting to Uganda Shillings Four Billion Six 10 Hundred Million only (Ug. Shs 4,600,000,000/=) which had erroneously been paid as a settlement of the dispute between the parties then pending appeal at the Court of Appeal. M/ s Muwema and Mugerwa Advocates immediately, thereafter, by a correspondence dated 8 th^ July 2013 communicated to the Plaintiff/ 15 Appellant in Supreme Court of the remittal of Uganda Shillings One Billion Only (Ug. Shs. 1,000,000,000/= (Exhibit P11) in addition to mentioning that an amount of Ug. Shs 921,195, 924/= had been directly remitted to the farmers in addition to indicating that the balances of monies they had received had been reduced to their legal 20 fees and disbursements since they had a remuneration agreement with the farmers entitling them to a portion of the amount recovered which they intended to apply towards their outstanding fees.
5 b. Paid interest of Uganda Shillings Four Billion, Eighty-Two
Million, Three Hundred and Fifty Six Thousand Three Hundred
Eighty Five only (Ug. Shs. 4,082,356,385 ) on the failed deed of
settlement owing to the Defendants lack of mandate to enter
settlement.^ ",^.
10 c. Interest on (a) at court rate from the date of making the demand.
d. Costs of the Suit.
2. Representation:
During the hearing of this matter the Plaintiff was represented by Mr.
Michael Mafabi and Mr. Allan Waniala of M/s Sebalu & Lule
15 Advocates while Mr. Mulema Mukasa of M/ s KSMO Advocates
appeared for the 1st Defendant and Mr. Ebert Byenkya and Mr. Bazira
Anthony of M/s Byenkya, Kihika & Co. Advocates appeared for the
2 nd, 3 rd, 4th and 5th^ Defendants.
3. Issues:
20 The parties framed the following for trial;
1. Whether the Plaintiff has an actionable claim in law and is
entitled to a refund of monies paid to the firm of Muwema &
Mugerwa Advocates
7
5 11. Whether the Defendants have a lien and set-off on the sums being held on the account
- (^) Whether the payment of UGX 630,000,000/= was paid to solely discharge the 2nd Defendant '.. IV. Whether there was a discharge of the 2nd Defendant 10 v. Whether the Defendants are liable to refund the sum of UGX 921,195,924/= which was paid out to the farmers VI. (^) Whether the Plaintiff is entitled to the remedies claimed. 4. Witnesses: a. Plaintiffs witnesses: 15 i. Ms. Agnes Nantongo b. Defendants Witnesses: i. Mr. Herbert Kiggundu (DW1) ii. Mr. Siraji Ali (DW2) iii. Mr. Terrence Kavuma (DW3) 20 iv. Mr. Brian Kabayiza (DW4) v. Mr. Fred Muwema (DW5) vi. Mr. Friday Kagoro Roberts (DW6)
s It was argued for the Plaintiff that the ruling meant that under the
decree of the Supreme Court, the Plaintiff was condemned to make
double payments in respect of the claims of the farmers who were
formerly clients of the Defendants. ",^.
Counsel submitted further that the Plaintiff made a demand for the
10 sum upon which the Defendants partially refunded Ug. Shs
630,000,000/= leaving a balance of Ug. Shs. 3,670,000,000/= the
principal amount in addition to interest and costs of the suit.
Counsel referred to incidents of legal liability of the Defendants jointly
and severally.
lS On this it was argued that the Defendants are jointly and severally
liable to refund monies owing to the Plaintiff as money had received
by them referring to Bryan Gamer, Black's Law Dictionary, Ninth
Edition at page 33, that;
'An action for money had and received lies to recover
20 money which the Plaintiff had paid to the Defendant. The
action lies to recover money on the ground that it had been
paid under a mistake or compulsion, or for a consideration
which had wholly failed ••.•' k (fw.t'/~""';~^ vo^ (cNwOA J./I-.^ ",Jtvv. U. fill^ ~a" fl4~1l~~
5 It was further submitted that the concept of money had and received
is founded in equity and is meant to prevent unjust enrichment of
the Defendants at the expense of the Plaintiff.
",.
Several authorities were cited by counsel including Clothlink
Uganda Limited vs African Trade Investments Fund Limited &
10 Another HCCS No. 234 of 2010 as well as Chitty on Contracts, 33rd
Edition.
On the liability of the Defendants jointly and severally, counsel for
the Plaintiff asserted that the section 9 (1) of the Partnership Act (D.
Exh.18) provides that a partner in a firm is liable jointly with the
15 other partners for all the debts and obligations incurred while he or
she is a partner. And that at the time the sums were received, DW
and DW5were partners and remained so during the period when the
monies claimed were utilized by the law firm.
That the 3 rd, 4th and 5 th^ Defendants were also partners when the
20 liability arose. The Plaintiffs counsel contended that they became
partners by virtue of the partnership deed dated 1 st^ February 2011,
and became liable because after they joined the Defendant's law firm,
the said firm continued to carry out work relating to the case and
;':".fol"lln s1J.r.r
5 signed between the parties was not a valid compromise settlement
and consent order since it was not signed and sealed, with the result
that there was failure of consideration which meant that the
Defendants were liable to refund the sums^. that were remitted^ ".. to
them. Furthermore, that the money remitted to the Defendants
10 possessed the character of client's money and was paid of the
Defendant's clients and should be available for refund. It was
submitted that there was documentary evidence that the money was
moved from the Defendant's law firm and disbursed to the
Defendants personal accounts and then used for their own benefit as
15 per D. Exh. 22, D. Exh. 17, and P. Exh.
Also,that by refunding UGX630,000,000/ = the Defendants admitted
that they were liable to refund the full sums, as well as the interest
on the sums claimed.
On number Issue (I1) of whether the Defendants have a lien and set-
20 off on the sums being held on account counsel for the Plaintiff
submitted that the Defendant's premise for a lien and set-off based
on the remuneration agreement signed between them and their
former clients is illegal, and can
L
supported by public policy.
&~rJ.)t(!J. s!L1ZfP
e-
5 Counsel cited Shell Uganda Limited 7 & 9 Others vs Muwema
and Mugerwa Advocates & Solicitors Civil Appeal No. 20f2013,
the Supreme Court, which was dealing with a similar issue found that such arrangements are champertous;^. "^. See: https:llwww.dictionary.com/browse/champertous an adjective 10 of the noun champerty ['tfamp~ti] which in law is an illegal agreement in which a person with no previous interest in a lawsuit finances it with a view to sharing the disputed property if the suit succeeds and so since the claim as made in P. Exh. 6 is champertous it means that the Defendants cannot claim off it. 15 Additionally, that the Defendants were already entitled to costs of Ug. Shs. 300,000,000/= under P. Exh.2, the Deed of Settlement and also that the costs claimed by the Defendants actually belonged to their former clients. On issue (Ill) and (IV) of whether the payment of Ug. Shs. 20 630,000,000/= was paid solely to discharge the 2nd Defendant and whether there was a discharge of the 2nd Defendant, respectively, counsel for the plaintiff submitted that the sum of Ug. Shs 630,000,000/= was paid to the p~'ntiff as a partial refund and not r!.#'lI..^ Il(/J^ ~'L../ael «.^ I^ 1-. dt.Iljj} U. fill^ tY!t1c'r,,;/
5 outstanding amount from at court rate from the date of demand on
18 th^ July 2014 until payment in full; and costs of the suit.
b. Defendants submissions: ".
a. 1st^ Defendant's submissions:
On whether the Plaintiff has an actionable claim in law and is entitled
10 to a refund of monies paid to the firm of Muwema & Mugerwa
Advocates, the 1 st Defendant's counsel submitted that the Plaintiffs
submissions heavily relied on the ruling in Supreme Court in Civil
Application No. 7 of 2013 BAT (U)LTD Vs Sedrach Mwijakubi &
Others, an application for review, yet it in no way found that the
15 Plaintiff has an actionable claim but instead arrived at several
conclusions including that the Applicant took a risk to make part-
payments to the law firm, and was at liberty to recover whatever
sums were due to it. That, it also found that the Supreme Court could
not make an order against the law firm for repayment of the monies
20 since it was not part of those proceedings; and that it was necessary
to establish if the said sums were due to the Applicant from the law
firm, through a suit, if it was actionable.
5 According to the 1st Defendant's counsel, the payment of the sums in
question arose out of Deed of Settlement (D. Exh. 1) and the Consent
Order (D. Exh.2), which is barred by law and is illegal, because the
Plaintiff and the farmers attempted to settle an appeal by consent^.^ ~.
and reverse the judgment of the lower court. Counsel relied on
10 Bulasio Konde vs Bulandina Nankya & Another Civil Appeal No.
7 of 1980 for the holding that an appellate court will not allow an
appeal by consent as to do so would be to find that the decision below
was wrong and that only an appellant court has powers to reverse a
decision of the court below after hearing the appeal.
15 Counsel for the 1 st Defendant submitted that the Consent Order
sought to reverse the Judgment and Decree in that it was agreed to
reverse the judgment and decree of the High Court and yet it expected
the court to go by the Consent Order without deciding the matters of
law. It also decided the liability of both parties and discharged them,
20 without the court deciding the matters of law and arriving at a
decision, and the amounts to be paid by BATwere not included in
the Consent Order but were secretly hidden and kept in the Deed of
Settlement. That, the clause in the Consent Order that 'This Appeal
JJ,•.fwti t 7t &. !ilcnr
5 section 46 of the Advocates Act Cap. 267. That, under this section,
the Defendant law firm is entitled to treat the monies held as a set-
off, lien, charge, counter-claim or any other manner of recourse or
right.^ "..
Further still, that the Plaintiffwas well aware of the Defendants' claim
10 as set-out in the Advocates-Clients Remuneration Agreement (D.
Exh. 9). Counsel submitted in addition that all the Defendants clearly
testified that the Defendant law firm had not been remunerated with
the sums that were due to them under the Advocate Client-
Remuneration-Agreement, as well as the party-to-party bill of costs
15 in the High Court and Court of Appeal where the Defendant's clients,
the tobacco farmers were awarded costs.
It was submitted for the 1st Defendant that the tobacco farmers were
awarded costs of the suit in both the High Court and Court of Appeal
and it was the Defendant's law firm that was representing them until
20 22 nd^ October 2010 when instructions were withdrawn from them
which was after the judgment of the Court of Appeal. Further that
the bill of costs was filed in both courts by the Defendant's law firm
and the Plaintiff was served with~e but they are still pending
~.I!"-:J,,Jt. (j rikr
5 taxation, before the Plaintiff can pay the Defendants' law firm as the
retained advocates on record. Counsel submitted that the bill of
costs for both claims is Ug. Shs 1,747,929,639/= for the High Court
and Ug. Shs 2,409,323, 178/= for the Court of Appeal with the total^.^ "^.
being Ug. Shs 4,157,252,817/=.
10 Counsel distinguished the case of Shell Uganda Ltd & 9 Others vs
Muwema and Mugerwa Advocates & Solicitors cited by the
Plaintiffs' counsel and stated that in the present case, the clients
admitted as per P. Exh.7 that the advocates were not paid their costs
and in fact agreed that they had been admitted they had indeed
15 instructed the Defendant's law firm.
Concluding the submissions on this issue, counsel submitted that
the Defendant's law firm has a statutory lien on the sums paid to it,
cannot be paid by its clients the legal fees as per section 46,
notwithstanding the withdrawal of instructions or the fact that the
20 Court of Appeal declined to endorse and seal the Consent Order or
that the Supreme Court declined to validate it.
On Issues No. 4 and No. 5 Whether the payment of Ug. Shs
630,OOO,OOO/~ was paid to sOle~harge the second Defendant
;~lb.fot.Yr~~. dY (j dil'Vr
