[2022] UGCommC 175

### THE REPUBLIC OF UGANDA

### IN THE HIGH COURT OF UGANDA AT KAMPALA

#### (COMMERCIAL DIVISION)

# CIVIL SUIT NO.630 OF 2019

**UGANDA RE** MIDLANDS FREIGHT LIMITED ::::::::::: **PLAINTIFF**

VERSUS

: RESPONDENT **UGANDA REVENUE AUTHORITY :::**

> ASSISTANT COMMISSIONER **LITIGATION**

# BEFORE HON. LADY JUSTICE JEANNE RWAKAKOOKO

### RULING ON PRELIMINARY OBJECTIONS

#### Introduction

In its Written Statement of Defence, the Defendant raised eight (8) preliminary objections which it contends are capable of disposing of the suit;

- 1. That the Plaintiff has no locus to institute this suit against the Defendant. - 2. That the Plaintiff does not have a cause of action against the Defendant. - 3. That the Defendant is the wrong party to the suit. - 4. That the Defendant is entitled to indemnity from the Plaintiff. - 5. That the Plaintiff's action is time barred. - 6. That the Plaintiff's case is res judicata. - 7. That this suit is an abuse of court process. - 8. That this Honourable Court lacks jurisdiction to handle this matter.

In light of the foregoing, the Defendant prayed that this suit be dismissed with costs to the Defendant.

#### Background

The Plaintiff instituted a suit against the Defendant seeking damages, interest, and costs of the suit for what it claims was the Defendant's unlawful actions of holding and remaining in possession and custody of Trailer Registration No. KBF 053W/2D 617 (the suit vehicle) after the Plaintiff asserts that it had paid a penalty for the vehicle.

The Defendant's claim is that the suit vehicle was used to fraudulently export wa consignment without paying export levy. The Defendant claims the consignment was detained in Mombasa by the Kenya Revenue Authority while

UGANDA REVENUE AUTHORITY **SERVICES & BOARD AFFAIRS**

the suit vehicle was seized by the Defendant vide seizure notice No. REF BSTM/OFF/02/2012-017 issued at Busitema on 24^th February 2012.

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The suit vehicle had been registered in the names of Credit Bank Limited (Kenya) and the Plaintiff under a finance loan agreement the Plaintiff had with Credit Bank Limited. The Plaintiff's claim is that even after it paid the Defendant the outstanding tax on the consignment and the penalty on the truck, the Defendant refused to release the vehicle despite frequent demands and a repossession order dated 14^th November 2012 being issued to return the vehicle to Credit Bank Limited.

The Defendant subsequently released the suit vehicle to the Plaintiff on 14^th March 2019 pursuant to a Consent Order in Malaba Chief Magistrate's Court Misc. Cause No.001 of 2019, Midland Freights Ltd (suing through Owora Patrick by Powers of Attorney) v Uganda Revenue Authority. The Plaintiff also claims that the Defendant released the vehicle to the Plaintiff upon an undertaking by the Plaintiff to indemnify the Defendant for any third party claims particularly those of Credit Bank Kenya.

The Plaintiff subsequently filed this case on 26^th July 2019 reeking remedies against the Defendant on account of the seizure of the suit vehicle. In filing the Written Statement of Defence, the Defendant raised eight (8) preliminary objections in paragraph 3 of its Defence, as highlighted above. These preliminary objections were also raised as issues $1 - 8$ in the parties' Joint Scheduling Memorandum.

### Issues for Determination

The issues for determination in this Ruling shall be addressed as follows;

- 1. Whether this Court has jurisdiction to handle this matter? - 2. Whether the Plaintiff's case is res judicata? - 3. Whether, the Defendant is entitled to indemnity from the Plaintiff? - 4. Whether the Plaintiff's action is time barred? - 5. Whether the Plaintiff has a cause of action against the Defendant? - 6. Whether the Defendant is the wrong party to the suit? - 7. Whether the Plaintiff has the locus to institute the suit against the Defendant? - 8. Whether the suit is an abuse of court process?

#### <u>Representation at Hearing</u>

At the hearing on 4^th October 2021 before the Deputy Registrar, the Plaintiff was represented by counsel Shaban Sanywa of M/S Sanywa Wabire & Co. Advocates and the Defendant was represented by Counsel Sam Kwerit.

The parties were directed to file written submissions in this matter by the Deputy Registrar, which submissions were duly filed and have been considered in resolving the preliminary objections raised by the Defendant.

### The Position of the Law

Preliminary objections relate to points of law, raised at the outset of a case by the defence without going into the merits of a case. Thus in any preliminary objection, there is no room for ascertainment of facts through oral evidence (see Yaya Farajallah v Obur Ronald and 3 ors Civil Appeal No. 81 of $2018$ ).

Under the Civil Procedure Rules SI 71-1 (CPR), preliminary objections are founded in **Order 6 rule 28** which provides;

Any party shall be entitled to raise by his or her pleading any point of law, and any point so raised shall be disposed of by the court at or after the hearing; except that by consent of the parties, or by order of the court on the application of either party, a point of law may be set down for *hearing and disposed of at any time before the hearing.*

**Order 6 rule 29** of the CPR allows the court to dismiss a suit if the point of law substantially disposes of the whole suit, it provides;

If, in the opinion of the court, the decision of the point of law substantially disposes of the whole suit, or of any distinct cause of action, ground of defence, setoff, counterclaim, or reply therein, the court may thereupon dismiss the suit or make such other order in the suit as may be just.

The law on preliminary objections was discussed by Lord Windham JA in N. A. S Airport Services v A. G. [1959] EA 53 at 58;

"Clearly the object of the rule is expedition. But to achieve that end, the point of law must be one which can be decided fairly and squarely, one way or another, on the facts agreed or not in issue on the pleadings, and not one which will not arise if some facts or facts in issue should be proved, for in such a case the shortcut, as is so often the way with shortcuts, would prove longer in the end. [...] In brief, the procedure under Order 6 rule 27 (now Order 6 rule 28) is a shortcut which should be sparingly used, and only in exceptional circumstances where the facts relevant to the point of law to be set down are so clear cut on the pleadings that there is no room for evidence upon any fact pleaded which would assist in the decision of that point of law or fact, if decided in one way, would result in the point no longer arising."

In Mukisa Biscuit Manufacturing Co Ltd v West End Distributors Ltd [1969] **EA 696 at page 700** court noted that;


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"A preliminary objection is in the nature of what used to be demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. The improper raising of points by way of preliminary objection does nothing but unnecessarily increase costs and, on occasion, confuse *the issues. This improper practice should stop."*

Based on the above authorities, we see that preliminary objections must be based on points of law that are clear and beyond doubt. Preliminary objections which are premised on facts that are disputed cannot be used to determine the whole matter as these ought to undergo determination through the full trial process and the weighing and examination of evidence.

Thus, the facts being dealt with in resolving preliminary objections must be precise and clear to enable Court to say that those facts are not contested or disputed. Anything that purports to be a preliminary objections must not, itself, derive its foundation from factual information must be tested by the normal rules of evidence. Where the Court needs to investigate facts, a matter cannot be raised as a preliminary point (see *El Busaidy v Commissioner of* Lands and Others [2002] 1 KLR 508)

A defendant who wishes to rely on points of law as a preliminary issue is required to set out such points of law in the WSD before the preliminary issue is regarded as properly raised. A party who seeks to raise a point of law based on disputed facts which, if properly presented and supported by some form of affidavit evidence, may dispose of the suit, is obligated to move court by way of a formal application raising the point of law (See Yaya Farajallah v Obur Ronald and 3 ors Civil Appeal No. 81 of 2018.

#### Resolution

### Issue 1: Whether this Court has jurisdiction to handle this matter?

Concerning the first issue, the Defendant's counsel submitted that this Court does not have original jurisdiction to hear this suit and that the Plaintiff should have lodged an Application for review of the Commissioner's actions before the Tax Appeals Tribunal under section 230(1) of the **East African**. Community Customs Management Act, 2004 (EACCMA). The mentioned section provides as follows;

230(1) A person dissatisfied with the decision of the commissioner under section 229 may appeal to a tax appeals tribunal established in accordance with section 231.


The Defendant's counsel argued that the proper procedure and forum for challenging the Commissioner's actions of seizing the vehicle is provided under section $229(1)$ of **EACCMA**, the mentioned section reads as follows;

$229(1)$ A person directly affected by the decision or omission of the Commissioner or any other officer on matters relating to Customs shall within thirty days of the date of the decision or omission lodge an application for review of that decision.

Counsel for the Defendant also heavily relied on the Supreme Court case in Uganda Revenue Authority v Rabbo Enterprises (U) Ltd & Anor Supreme Court Civil Appeal No. 12 of 2014 to submit that all tax disputes must first be lodged with the Tax Appeals Tribunal and only taken to the High Court on Appeal.

The Plaintiff's counsel submitted that this Court has jurisdiction because their claim is for compensation, damages, and interest against the Defendant on account of what they claim was unjustified detention of the suit vehicle after the Plaintiff had fulfilled its payment's obligations in compliance with the Commissioner's decision. The Plaintiff submitted that this is a tort in nature and that the Plaintiff is not challenging the Commissioner's tax administration decision or action of seizing the suit vehicle at Busitema on $24^th$ February 2012, but rather the continued detention by the Defendant even after the funds were paid. Thus, the Plaintiff argued that the present claim is not a tax administration related dispute challenging any tax or penalty decision, determination, notice, and assessment payable by the Plaintiff but a civil wrong of a commercial nature which this Court has jurisdiction to entertain.

I have carefully considered the main authority relied on by the Defendant concerning this issue (*Uganda Revenue Authority v Rabbo Enterprises (U)* Ltd & Anor (Supra), it is a Supreme Court authority and is therefore binding on all lower courts, including this Court. The dispute, in that case, arose out of an attempt by URA to use the power granted by it in statute to enforce payment of what it perceived were taxes owed by the Respondent in that case. What was in issue was whether or not the Respondent in fact and in law owed tax to URA and whether URA was using the law of seizure appropriately. In that case, Professor Lillian Tibatemwa- Ekirikubinza found that the seizure arose out of a tax assessment on imported goods and therefore amounted to a tax dispute for which the Tax Appeals tribunal had initial/original jurisdiction and the High Court Appellate jurisdiction.

The Plaintiff's counsel sought to argue that the above authority has been cited out of context and is distinguishable from the present case because it applied to the Commissioner's decisions on a notice, on assessment, or any


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determination within the meaning of **section** $1(k)$ of the **Tax Appeals** Tribunal Act Cap 345. The mentioned section defines a "tax decision" to mean "any assessment, determination, decision or notice". I thus disagree with the Plaintiff's counsel, in my view in light of the Court's analysis in the Supreme Court decision cited above and my reading and interpretation of the above section a tax decision is any decision which concerns any tax assessment, any tax related determination, any tax related decision or any notice issued in light of the foregoing. The Commissioner's decision in this case to maintain seizure of the suit vehicle even after the Plaintiff claims they had paid outstanding taxes and penalties, falls within the definition of a "taxation decision" and therefore within the ambit of a "tax dispute" as explained by Professor Tibatemwa- Ekirikubinza in **URA** v Rabbo Enterprises **(Supra)**. This is particularly so in light of the fact that the seizure in this matter arose out of a tax assessment on imported goods and what the Defendant believed was the Plaintiff's attempt to fraudulently export a consignment without paying export levy. To argue that it no longer amounted to a tax dispute where the seizure continued would be to completely go against the abovementioned authority which was also looking at the legality of the Commissioner's seizure of goods in that case.

In my considered view, this would also be incorrect because the Commissioner's actions, though they may have been unjustified, clearly arose out of what they perceived to be their authority as the tax regulator under the law. Thus, to the extent that the issue in the present matter is similar to that in Uganda Revenue Authority v Rabbo Enterprises (U) Ltd & Anor (Supra) in as far as the seizure arose out of a tax assessment on imported goods, it amounts to a tax dispute in my view for which the Tax Appeals Tribunal has original jurisdiction.

Therefore the correct procedure would have been for the Plaintiff to bring the claim before the Tax Appeals Tribunal first, challenging the Commissioner's actions of continued seizure of the vehicle before bringing a claim in this Court. Should the Plaintiff be dissatisfied with the decision of the Tax Appeal Tribunal then it has the option of appealing to this Court under **section 27** of the Tax Appeals Tribunal Act.

I, therefore find that this Court does not have first jurisdiction to entertain this matter before it has been considered and determined by the Tax Appeals tribunal.

# Issue 2: Whether the Plaintiff's case is res judicata?

The doctrine of res judicata is enshrined in section 7 of the Civil Procedure Act Cap 71 as follows;

No court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try the subsequent suit or the suit in which the issue has been subsequently raised, and has been heard and finally decided by that court.

In Africa One Tours & Travel Ltd and Anor $v$ The Government of Libya HCCS No.253 of 2012 the court noted that the above provision outlines the parameters that must be satisfied for the doctrine of res judicata to apply, namely;

- 1. The existence of a former suit that has been finally decided by a competent court. - 2. The parties in the former suit should have been the same as those in the latter suit, or parties from whom the parties in the latter suit, or any of them, claim or derive interest. - 3. The parties in the latter suit should be litigating under the same title as those in the former suit. - 4. The matter in dispute in the former suit should also be directly and substantially in dispute in the latter suit where res judicata has been raised as a bar.

In Maria Kevina vs. Kyaterekera Growers Coop Society [1996] 1 KALR 160 it was held that for res judicata to apply to any case, the essential elements which must be fulfilled are that the matter in issue must be similar and must have been directly or substantially in issue in a previous suit; the parties must be the same or other parties, but claiming from the parties in the previous suit; the courts, in either case, must be of competent jurisdiction; and the matters should have been heard on merits and finally determined by the previous competent court.

On this issue, the Defendant's counsel submitted that the Plaintiff's suit is res judicata because;

- a) The was a Miscellaneous Cause No. 001 of 2019, Midlands Freight Ltd (Suing through Owora Patrick by Powers of Attorney) v Uganda Revenue Authority. - b) Both the former suit and the current suit are between the Uganda Revenue Authority and Midland Freight Ltd, save for the fact that the former suit was brought through a done of a Power of Attorney. - c) In both suits, the Plaintiff sought and seeks to challenge the actions of the Defendant in seizing and holding the suit vehicle and that seeking


7 | Page damages in the present suit is something that the Plaintiff could have brought forwarding when they were challenging the Defendant's holding of the vehicle in the earlier Miscellaneous Cause.

The defendant further submitted that the Consent Order which was signed and sealed by the Court on 13^th March 2019 on terms including an order that the Defendant release the suit vehicle and that the Plaintiff indemnifies the Defendant against any third party claims in respect of the suit vehicle, amounted to a full and final settlement of the dispute.

On this issue, the Plaintiff's counsel contended firstly that this matter is not res judicata arguing firstly that prior to the Miscellaneous Cause filed at Malaba which resulted in the Consent Order, the Defendant had previously defied the repossession order which was issued on 14^th November 2012. I am not sure why the Plaintiff's counsel chose to raise the previous repossession order in arguing this issue of res judicata, and I am unsure as to how it is relevant to the present matter.

The Plaintiff's counsel argued secondly that since the vehicle was in the possession of the Defendant that the time the Miscellaneous Cause was brought, the Plaintiff was not at that stage able to (physically) assess the damages and compensation they could claim. This only became apparent after the suit vehicle was released to the Plaintiff on 14^th March 2019 where it was deemed to be in "an un-roadworthy condition" and "incapable of resuming business" and thus the Plaintiff's counsel averred, the Plaintiff brought the present suit praying for compensation for its depreciated value.

In my considered view, the main issue to be resolved in the present suit concerns the **effect** of seizure, namely damage and loss that the Plaintiff alleges to have occurred from the Defendant's continued seizure of the suit vehicle for 7 years (from 2012 to 2019). I agree with the Plaintiff's counsel on their second substantive submission on this issue; the Plaintiff could not have known or made an assessment on the damages and losses it had incurred from the Defendant's continued seizure of the suit vehicle until the suit vehicle was released and underwent the necessary assessments. Therefore, it follows that it would be unsound to say that the present suit is res judicata because, clearly, there are issues that remain outstanding between the parties. that were not addressed or resolved in the Miscellaneous Application primarily whether or not the Defendant is liable to pay the Plaintiff compensation, damages and the remedies they seek as a result of the Defendant's continued seizure of the suit vehicle or alternatively whether or not the Defendant's actions of maintaining seizure were justified and intra vires based on the earlier tax assessments made and their powers under the relevant applicable tax legislation.

I thus resolve that the present suit is **not** res judicata. Having resolved the first issue with a finding that this court is not the appropriate forum to handle this matter, my considered view is that the matter should proceed and be heard at the Tax Appeals Tribunal level on the issue of the legality of the Defendant's actions and the damages and compensation the Plaintiff is claiming from the Defendant's seizure of the suit vehicle.

# Issue 3: Whether the Defendant is entitled to indemnity from the Plaintiff?

On this issue, the Defendant argued that as a consequence of the Consent Order issued on 13^th March 2019, the Plaintiff undertook to make good any loss arising from the dispute between the parties as a condition for the release of the suit vehicle, on this basis the Defendant's counsel argued that the Plaintiff cannot now be seen purporting to claim for compensation from the Defendant.

In response, the Plaintiff's counsel argued that the agreement as to indemnity was with respect to third party claims that may arise from the Defendant's actions concerning the suit vehicle, particularly from Credit Bank Kenya.

Seeing that the Plaintiff is itself not a "third party", this preliminary objection holds no water, in my view. The exact wording of the Consent Order reads;

"2. The Applicant shall indemnify the Respondent of any third party claims in respect of the suit vehicle that may arise including but not limited to any claim from Credit Bank Limited, Kenya the co-owner of the suit vehicle."

This is clearly not a third party claim but one brought by the Plaintiff who were the Applicant in Miscellaneous Cause No. 001 of 2019 from which the Consent Order arose.

I thus resolve that the Defendant is not entitled to indemnity from the Plaintiff with respect to the present suit.

### Issue 4: Whether the Plaintiff's action is time barred?

On this issue, the Defendant argued that the Plaintiff's claim is time barred under the **Civil Procedure and Limitation (Miscellaneous Provisions) Act, Cap 71** because the case ought to have been brought within two years from when the cause of action arose. The Defendant's counsel argued that because \* the suit vehicle was seized more than 9 years ago (on 24^th February 2012) the time for instituting the present suit has expired.

In response, the Plaintiff's counsel relied on **FX Miramago v Attorney General (1979) HCB24** to argue that the period of limitation begins to run from the time the cause of action accrued. The Plaintiff's counsel submitted

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that the Defendant defiled the repossession order from 2012 until 2019 which amounted to a continuing tort, thus when the suit was instituted in 2019, the Plaintiff was within the 2 year limitation period provided under the law.

On this issue the law is clear, the limitation period begins to run from the date on which the cause of action accrues where the cause of action takes place over an extended period of time. In Eridad Otabong vs. Attorney General, S. C. C. A. 6/1990, (1991) ULSLR 150 the Supreme Court held that the limitation period begins to run from the date on which the cause of action accrues (also see Al Hajji Nasser Ntege Sebaggala v Attorney General and Ors Constitutional Petition No. 1 of 1999) UGCC 3.

In this case, the cause of action, and the basis on which the Plaintiff brings their claim, concerns the continued seizure of the suit vehicle, which seizure started on 24^th February 2012 and continued until 14^th March 2019 when the vehicle was finally released to the Plaintiff. Thus, the correct reference date to start counting the period of limitation is 14^th March 2019 and not 24^th February 2012 because that is when the Defendant's continued seizure of the suit vehicle seized.

I agree with the Plaintiff's counsel to the extent that the Defendant's conduct has to be looked at as continuous and recurring for each day the Plaintiff claims the illegal seizure continued. In any event, part of the Plaintiff's claims are for compensation for what they claim was damage that had occurred to the suit vehicle while it was in the Defendant's custody for 7 years; the Plaintiff's knowledge or assessment of this could not have arisen in 2012 when the damage hadn't even occurred but had to arise in 2019 when the vehicle was released and the damage was discovered.

I therefore find that the Plaintiff's action is not time barred

## Issues 5 & 6 Whether the Plaintiff has a cause of action against the Defendant AND Whether the Defendant is the wrong party to the suit.

I am resolving issues 5 and 6 together because the resolution of issue 5 has a direct result on issue 6. If the Plaintiff has a cause of action against the Defendant then, clearly the Defendant was the right party to sue and the reverse is also true if the first issue is resolved in the negative.

Concerning the Plaintiff's cause of action, the Defendant argued that it is not liable for any loss suffered by the Plaintiff since the Defendant was exercising her statutory mandate. Counsel for the Defendant argued that because the suit vehicle had been used for the conveyance of uncustomed goods, it was liable to forfeiture under section **210 (c)** of the **EACCMA** and the suit vehicle would have been forfeited to the state. On this basis, the Defendant's counsel argued that the Plaintiff's correct recourse would have been to sue Chang


Shen Commercial Ltd, the company which contracted the Plaintiff to transport the uncustomed goods. On this basis, the Defendant also argued under the $6^th$ issue that it was the incorrect party to sue in these circumstances.

In response, the Plaintiff's counsel argued that the Defendant's submissions lack merit because the Plaintiff's claim is with regards to damages on account of the Defendant's refusal to release the suit vehicle even after the Plaintiff had paid all the taxes and penalties due and the Defendant had recovered money from selling the consignment, which was a condition for the release of the suit vehicle. Thus, counsel for the Plaintiff argued Chang Sheng Commercial Ltd is not liable for the damages claimed by the Plaintiff because the suit vehicle was in the possession of the Defendant. The Plaintiff's counsel further averred that at the time when the suit vehicle was seized together with offending goods, forfeiture proceedings were commenced the but subsequently dropped by the Defendant because the Defendant preferred a penalty as a condition for the release of the vehicle.

In my view both parties argued these issues on grounds of the Defendant's liability (or lack thereof) and, in so doing, discussed facts which are clearly in dispute between the parties in the suit, namely whether or not the Defendant's conduct was justified. This is not a legal issue and therefore greatly offends the rules concerning preliminary objections I have already highlighted above. I wish to state again that in resolving the issues raised in the Defendant's preliminary objections, this Court has no room to ascertain the facts disputed between the parties, the correct forum to address disputed facts is a trial (see **Yaya Farajallah v Obur Ronald and 3 ors Civil Appeal** No. $81$ of 2018).

Furthermore, I wish to emphasise again as was established in *Mukisa Biscuit* Manufacturing Co Ltd v West End Distributors Ltd [1969] EA 696 at page 700, preliminary objections which are premised on facts that are disputed cannot be used to determine the whole matter as these ought to undergo determination through the full trial process and the weighing and examination of evidence.

Instead of arguing whether or not the Plaintiff has raised a cause of action against the Defendant, the Defendant's counsel sought to argue that the Defendant is not responsible for violating the Plaintiff's rights. In my view that is a different argument altogether which touches on the issue of whether or. not the defendant is liable - something which can only be conclusively determined at trial. Raising a cause of action is one thing, whether or not that cause of action stands in light of the evidence is another thing altogether. The former ought to be our only concern at this stage of considering preliminary objections and not the latter. A Plaintiff can file a Plaint that discloses a valid cause of action against a Defendant (all Plaintiffs are required to do so under


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Order 7 rule 11(a) of the Civil Procedure Rules) but then later it is discovered that the cause of action does not stand in light of the evidence put forward in a case. So the question here is whether, in reading the Plaint, the Plaintiff has satisfied the 3 requirements under Auto Garage v Motokov $[1971]$ E. A. 514 namely;

- 1. Is the Plaintiff claiming that they enjoyed a right? - 2. Are they claiming that this right was violated? - 3. Are they claiming that it is the Defendant who was liable for this violation?

If all 3 points are addressed by the Plaintiff in the Plaint, then their Plaint cannot be struck out under **Order 7 rule 11(a)**, if any one of the above are missing from the Plaintiff's claim then the Plaint (and consequently the Plaintiff's claim) ought to be struck out on grounds that they have not disclosed a cause of action being brought against the Defendant they are suing. At this stage, therefore, I am interested in assessing whether on a reading of the pleadings the Plaintiff has established a claim which fulfills the above 3 criteria. Fam not concerned with whether or not the Defendant is, in fact, liable in light of Plaintiff's claims, because that can only be determined once the evidence is considered. Clearly, the Defendant's liability is itself, a disputed fact which need not be raised or argued at this stage.

Having said that, on perusing the Plaint it is clear that the Plaintiff is alleging that they had a right to possessing the suit vehicle once they paid the tax and penalties to the Defendant and that they claim this right was violated, which violation they claim occurred at the hands of the Defendant. Thus, in my view, the Plaintiff has prima facie brought a valid cause of action against the Defendant and pursuant to which the Defendant must answer.

I thus resolve both issues 5 and 6 in the affirmative with a finding that the Plaintiff has brought a valid claim and satisfied the requirement for the establishment of a cause of action against the Defendant, who in this instance was the correct party to sue.

#### Issue 7 Whether the Plaintiff has locus to institute this suit against the Defendant? Reprint the Additional Contract with the Additional Contract with the Additional Contract with the Additional Contract with the Additional Contract with the Additional Contract with the Additional Contract with the Addi

The submissions made by the Defendant's counsel on this point were very unfounded in my view, counsel for the Defendant sought to argue that the Plaintiff, being a part owner of the suit vehicle together with Credit Bank Kenya, had no locus standi to bring this suit on grounds which, in my view are baseless particularly that the Plaintiff does not have a distinct share in the suit vehicle and it would not be possible to severe its interests from those of Credit Bank Kenya because they are part owners. That is a very absurd argument to put forward in my view, considering part owners have never been


prevented from protecting their rights under the law to the extent that they have a valid legal interest in any property. Secondly, in any event, Credit Bank Limited could not have brought the present suit because the Parties had previously entered into a Consent Order pursuant to which the Defendant was indemnified by the Plaintiff from 3^rd party claims including (and especially) those from Credit Bank Limited. And finally, as the Plaintiff's counsel rebutted, the arrangement that existed between the Plaintiff and Credit Bank Limited was to the effect that the suit vehicle was registered in the names of the Plaintiff as the owner and Credit Bank Kenya as a trustee. The Bank was holding an interest in the vehicle as security for a loan the Plaintiff had taken out until that debt was cleared, which debt, as I understand it, has since been cleared, thus to deny the Plaintiff locus to bring the present suit on grounds of part ownership constitutes an absurdity in my view.

I shall not belabour this issue further, I simply resolve it in the affirmative. Having found in the earlier issues that the Plaintiff has a prima facie cause of action against the Defendant, it equally follows that the Plaintiff has locus to institute the present suit.

### Issue 8 Whether the suit is an abuse of court process?

I revert back to issue 1 and my finding that the Plaintiff ought to have addressed the present issue to the Tax Appeals Tribunal before bringing it to this court. Whilst the procedure has been improper, I would not agree entirely with the Defendant that it amounts to an abuse of court process. This is especially considering that, aside from my resolution in issue 1, I have not found that the Plaintiff's suit is res judicata, that it is time barred, that they don't have a cause of action, locus standi, or have sued the wrong party under issues 2 - 8. I would also not describe the present suit as frivolous or vexatious and would have directed the parties to proceed to trial, but for the fact that this court cannot after what is clearly binding from the Supreme Court's decision in Uganda Revenue Authority v Rabbo Enterprises (U) Ltd & Anor (Supra) and oust the jurisdiction of the Tax Appeals Tribunal.

I thus resolve this issue in the negative and make the following orders.

#### **Orders**

In these premises, the Defendant's preliminary objection succeeds on the ground that, in these circumstances, this Court is not clothed with the jurisdiction to entertain the present suit but fails on the other preliminary objections raised. I hereby order as follows;

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- 1. This matter is hereby referred to the Tax Appeals Tribunal to hear and determine the matters in controversy between the parties. - 2. The costs of this application shall abide the decision of the Tax Appeals Tribunal.

It is so ordered.

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Jeanne Rwakakooko **JUDGE** 28/02/2022

This Ruling was delivered on the day of eliminary 2022

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