Flynote

Review of Supreme Court judgment; fundamental error; right to a fair hearing; removal of liquidator; proper construction of Companies Act regarding sale of company assets during liquidation; due process and jurisdiction of Supreme Court under insolvency law.

Case Summary

Brief facts

In the case of Henry Wambuga (Liquidator of African Textile Mills Limited in Liquidation) v Ranchhodbhai Shivabhai Patel and Mukwano Enterprises Limited, the applicant sought a review of the Supreme Court’s earlier judgment and ruling, which had found him fraudulent in the sale of company property and subsequently removed him as liquidator. The applicant argued that the Court’s findings of fraud and his removal were based on errors apparent on the record, violated his right to a fair hearing, and exceeded the Court’s jurisdiction under the Insolvency Act. The second respondent supported the application, contending that the Court unjustly enriched the company by ordering payment based on a flawed valuation without refunding the purchase price.

Judgment

The majority ruling, delivered by Chief Justice Owiny-Dollo, granted the application for review. It found that the Supreme Court had erred by introducing a new issue of fraud without giving the parties an opportunity to be heard, re-evaluating facts as a first appellate court, and relying on a deficient valuation report. The Court held that the sale was lawful under the Companies Act, set aside the findings of fraud and the removal order, and dismissed the original appeal, upholding the Court of Appeal’s decision. Consequential orders included directing the applicant to account for the sale proceeds and requiring each party to bear its own costs.

Justice Tibatemwa-Ekirikubinza dissented, arguing that the fraud issue was already part of the case and that the Court’s findings were based on evidence presented. She emphasized that an erroneous view of evidence or law is not a ground for review and that the applicant’s failure to comply with court orders disqualified him from seeking equitable relief. She would have dismissed the application, upholding the original judgment and the removal of the liquidator.

Justice Chibita also dissented, stressing the importance of finality in litigation and opposing the review on grounds that the applicant had acquiesced to the earlier ruling by seeking minor clarifications. He argued that the Court’s removal of the liquidator was lawful under the Insolvency Act due to the applicant’s failure to comply with statutory duties, and warned against the trend of multiple reviews undermining the Supreme Court’s authority.

Majority Judges (Granting the Application): Owiny Dollo, CJ; Tuhaise, JSC; Mwondha, JSC; and Monica K. Mugenyi, JSC.

Dissenting Judges: Lilian Tibatemwa-Ekirikubinza, JSC, and Mike J. Chibita, JSC.