[2025] UGCA 1

### THE REPUBLIC OF UGANDA

# IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

## CIVIL APPEAL NO. 074 OF 2021

CORAM: Cheborion Barishaki, Moses Kazibwe Kawumi, Asa Mugenyi JJA

MICHAEL MUKHONO...................................

**VERSUS**

ALICE KIMONO KIMASWA...................................

JUDGMENT OF CHEBORION BARISHAKI, JA

#### Introduction

This appeal is against the decision of the High Court before Namundi, J. by which the Court allowed the Respondent's application and set aside a consent decree made between the Appellant and the Respondent in Civil Suit No. 46 of 2010, with costs to the Respondent.

#### **Background**

The Appellant filed Civil Suit No. 46 of 2010 for breach of contract against the Respondent. The Respondent filed a defence opposing the suit and also filed a counter-claim seeking other reliefs in connection with the dispute between the parties.

The facts forming the basis of the case were that the Appellant was, at all material times, a religious leader operating a church in Mbale City, and the respondent attended that church. The Respondent was also the registered proprietor of a piece of land known as Block 9, Pallisa Road situated in Mbale Municipality which she held on a lease from Mbale District Land Board ("the suit land"). Apparently, the Respondent wished to develop the suit land but had no finances to do so, and consequently, she approached the Appellant for financial

assistance to develop the suit land. The Appellant and the Respondent concluded an agreement dated 28^th April, 2004, for the development of the suit land on terms set out therein. The agreement showed that the development of the suit land was to be undertaken by an entity called "Mt. Elgon Mission" in which the Appellant had some involvement. Indeed, the suit land was developed with a three floor storeyed building.

Subsequently a dispute arose between the Appellant and the Respondent regarding the implementation of the agreement culminating in the Appellant filing his earlier referenced suit. On 21^st November, 2012, when the suit came up for hearing before Zehurikize, J, the respective Counsel informed the Court of discussions between the Appellant and the Respondent with a view to a settlement whereupon the Court allowed an adjournment to enable completion of the settlement. The parties subsequently reached an agreement and the same was endorsed by the Court and reduced into a consent decree setting out the terms of agreement.

Later, another dispute arose between the Appellant and the Respondent as to the terms of the consent decree leading to the Respondent filing suits to have the decree set aside. First, the Respondent instituted Miscellaneous Application No. 287 of 2017 seeking review of the consent decree but it was dismissed by Okalany, J. Thereafter, the Respondent filed Miscellaneous Application No. 167 of 2020, from which the present appeal arises, seeking the setting aside of the consent decree and was successful.

The decision setting aside the consent decree was rendered by Namundi, J who after considering the necessary grounds for setting aside a consent judgment including illegality, existence of new and important matter and existence of an error apparent on the face of record, set aside the decree, principally on grounds of illegality although he also found that the application satisfied the ground of discovery of a new and important matter, as well as the ground showing an error apparent on the face of record.

With respect to illegality, Namundi, J considered the fact that Mt. Elgon Mission, which in the relevant agreement was stated to have undertaken to develop the suit land was a non-existent company that was not indicated on the register of companies. He found that it was irregular for a non-existent company to enter into a contract, and that doing so amounted to an illegality. Namundi, J. consequently found that it was also illegal to file a suit relating to such an illegal contract as was the case for Civil Suit No. 46 of 2010 and consequently the consent decree arising from the said suit was illegal.

In relation to the ground of discovery of a new and important matter, Namundi, J based on the fact that the respondent only discovered after the making of the impugned consent decree, that Mt. Elgon Mission which was party to the relevant agreement was a non-existent party, and found that the manner of the said discovery satisfied the ground of discovery of a new and important matter.

As to the ground of existence of a mistake or error apparent on the face of record, Namundi, J found that it was a mistake or error apparent on the face of the record for the consent decree to assign benefits to Mt. Elgon Mission which was not a party to Civil Suit No. 46 of 2010 where the parties were the appellant and the respondent.

It was for all of the above reasons that Namundi, J set aside the consent decree in Civil Suit No. 46 of 2010.

The appellant was dissatisfied with the decision of Namundi, J and has therefore, filed this Appeal based on the following grounds :

1) *The learned trial Judge erred in law and fact to hold that a letter marked "F"* from URSB dated 30^th October, 2020 is a new and important evidence discovered later on after the consent decree in Civil Suit No. 46 of 2010 was entered.

*2)The learned trial Judge erred in law and fact to hold that the consent decree in Civil Suit No. 46 of 2010 was premised on an illegality.*

*3)The learned trial Judge erred in law and fact to hold that including Mt. Elgon* Mission, not a party to the consent decree was a mistake/error apparent on the *face of the record.*

4) *The learned trial Judge erred in law and fact when he misapplied the principle* in the case of Attorney General vs. James Kamoga SCCA No. 8/2004 – "consent decree is passed on terms of a new contract between the parties to the consent judgment"."

The appellant prayed for orders that:

a) The Court quashes the entire High Court ruling and orders in Miscellaneous Application No. 167 of 2020.

b) The Court upholds the consent decree in Civil Suit No. 46 of 2010.

c) The appellant be granted costs in the Court of Appeal and in the Court below.

#### Representation

At the hearing, Mr. Enoth Mugabi represented the Appellant while Mr. Henry Kisalu represented the Respondent.

Court, on the application of the respective Counsel, adopted the conferencing notes the parties had filed prior to the hearing as their written submissions.

#### Appellant's written submlssions

Counsel for the Appellant argued a1l the 4 grounds concurrently.

Grounds 1,2,3 and 4

In his submissions on grounds 1, 2, 3 and 4, Counsel for the Appellant pointed out that the learned trial Judge had erred in taking into account alleged illegality arising out ofa construction agreement that was distinct from the consent decree in Civil Suit No. 46 of 2O7O, and thereby failing to appreciate that the parties' consent decree constituted a fresh agreement between the Appellant and the Respondent to compromise the relevant suit. Counsel cited the Supreme Court decision in Attorneg General as. James Mark Kamoga and Another, Cittil Appeal No. 8 oJ 2OO4 for the proposition that a consent judgment constitutes a fresh agreement that may only be interfered with on limited grounds such as illegality, fraud or mistake. He further sut,mitted that being a fresh agreement, a consent decree was valid notwithstanding any illegality connected with the suit from which it arose, and that such iilegality was irrelevant as consideration for setting aside the consent judgment. In support of this submission, Counsel cited the decision ofthe Supreme Court of Queensland in Steuens as. Hoberg (1952) sr R Qdlo (sc).

Secondly, Counsel submitted that the reasoning behind the learned trial Judge's finding regarding discovery of a new and important material justifying setting aside the consent decree was erroneous. The learned trial Judge found, basing on a search letter issued by the Uganda Registration Services Bureau (URSB) dated 20th January, 2O2O, that the Respondent had a11egedly discovered long aJter the making of the relevant decree, that Mt. Elgon Mission, which was indicated under the relevant construction agreement as the church responsible for developing the suit land, was a non-existent entity. Counsel argued that, however, the church envisaged under the construction agreement was the Appellant's church and was known to the Respondent who had averred in her pleadings that she attended that church and had approached it for hnancial assistance to develop the suit 1and. The Respondent had a1so, in her pleadings,

referred to the correct name of the church which was Mt. Elgon Baptist Independent Mission. In Counsel's view, all those circumstances showed that the Respondent was already aware of the status of the Appellant's church and thus it was not a new and important matter as the learned trial Judge erroneous held.

Furthermore, Counsel submitted that from the nature of the learned trial Judge's reasoning, it appeared that he was assessing the merits of Civil Suit No. 46 of 2010 which was erroneous considering the existence of the relevant consent decree, which constituted a fresh agreement compromising that suit.

Counsel further faulted the learned trial Judge for failing to warn himself of the danger of admitting the URSB letter which was made 8 years after the consent decree was made on 26^th November, 2012 and 16 years after the relevant agreement between the parties was made on 28^th April, 2004. Furthermore, according to counsel, the learned trial Judge should also have warned himself that the company registry was always in existence and should have been approached by the respondent to clarify on the status of the companies in issue. Counsel contended that the highlighted huge lapse of time showed that the Respondent had not exercised diligence in the matter and was therefore precluded from alleging that she had discovered a new and important matter of evidence. In support of this submission, Counsel relied on the India Supreme Court decision in Shri Ram Sahu (dead) vs. Vinod Kumar Rawat and Others $(2017).$

Thirdly, Counsel submitted that the learned trial Judge erred in failing to appreciate the fact that the relevant consent decree was a *bona fide* and honest agreement between the Appellant and Respondent reached following a compromise of their respective rights and claims; in failing to appreciate its nature as a fresh agreement that could only be set aside on limited grounds as was held in **James Mark Kamoga case (supra)**, none of which were proved in this case; and in failing to appreciate that the consent decree superseded the original cause of action as was held in Ismail Sunderji Hirani vs. Noorali Esmail Kassam (1952) 19 (1) EACA 131. Counsel further submitted that the learned trial Judge failed to uphold the sanctity of court as a medium for ensuring finality of matters compromised between the parties as recommended in the Indian Supreme Court decision in Salkia Businessmen's Association vs. Howrah Municipal Corporation, Case No. 5183 of 2001.

In light of the above submissions, Counsel submitted that the Court ought to find that grounds $1$ , $2$ , $3$ and $4$ succeed.

#### Respondent's submisslons

In his submissions in response, Counsel for the Respondent also argued all the grounds concurrently.

Grounds l,2, 3 and ⁴

Counsel supported the decision ofthe learned trial Judge and contended that he properly took into consideration the 1aw on review of consent judgments under Order 46 Rule 1 (1) of the Civil Procedure Rules (CPR) and the considerations laid out thereunder, including discovery of a new matter of evidence and or a mistake or error apparent on the face ofthe record.

With regard to the ground of discovery of a new matter or evidence, Counsel submitted that the learned trial Judge had correctly found that the Respondent had, upon conducting a search at URSB and obtained a search letter, discovered that Mt. Elgon Mission with which she made the relevant construction agreement to develop the suit land, was a non-existent entity. According to Counsel, the search letter was obtained upon exercise of diligence by the Respondent, was not available when the consent decree was made, and thus the discovery of the status of Mt. Elgon Mission qualihed as anew and important matter for purposes of Order 46 Rule 1 (1) of the CPR.

As to the mistake/error apparent on the record consideration, Counsel submitted that the learned trial Judge rightly found this condition satished given that the consent decree stated that appellant's church was allowed to continue its construction on the suit land yet the church was not a party to the suit the subject of the consent decree. Counsel contended that the learned trial Judge had therefore, correctly found that the inclusion and I or smuggling of the Appellant's church a stranger to the suit which was between the Appellant and the Respondent amounted to an error apparent on the face of the record.

Counsel further submitted that the learned trial Judge also rightly set aside the consent judgment on grounds of illegality basing on the fact that Mt. Elgon Mission which was said to have made the relevant construction agreement with the Respondent to develop the suit land was a non-existent entity. Counsel submitted that a non-existent entity purporting to contract amounted to an iilegality, and that such iliegality was sufficient to set aside the consent decree. Counsel referred to the decision of this Court in Masaka Munlcipal Counc-ll as. Takaga Frank, Civil Appeal No, O773 of 2015, the UK Supreme Court decision rn Patel os. Mirza [2016] IIKSC 452, and the Canada Supreme Court decision in Hall os. Herbert [7993] 2 SCR I59 for the principles on the illegality doctrine, and submitted that the illegality affords a basis for a court setting aside an illegal claim or refusing relief based tainted by illegality. Counsel submitted that the learned trial Judge had in the present case rightly set aside the relevant consent decree on grounds of illegality.

Counsel, in light of his submissions, prayed that this Court finds that grounds $1, 2, 3$ and 4 all ought to fail.

#### Appellant's submissions in rejoinder

Counsel for the Appellant reiterated that the relevant consent decree constituted a fresh agreement that rendered, irrelevant, any issues arising before it was made, including whether Mt. Elgon Mission was a non-existent entity, and whether the appellant's church could derive benefits from the decree yet it was not party to the main suit. Counsel therefore reiterated that the learned trial Judge had erred in considering those irrelevant issues, and that the appellant's submissions that heavily rely on the same issues were also misconceived.

Counsel also reiterated that the alleged illegality referred to in the Respondent's submissions did not arise from the consent decree but from the irrelevant matter that arose before it was made. In those circumstances, Counsel contended that authorities on illegality that were cited by the Respondent although setting out the correct principles were irrelevant to this Appeal.

#### Consideration of the Appeal

I have carefully perused the record of the Appeal, considered the submissions of the respective Counsel, the law and authorities cited. This is a first appeal from a decision of the High Court and it is now well-established that the duty of a first appellate is to test the correctness of the findings and conclusions of the trial Court after re-appraising the evidence and reconsidering the materials of the case. See: the leading authority of **Kifamunte Henry vs. Uganda, Supreme Court Criminal Appeal No. 10 of 1997.** I shall bear these principles in mind as I proceed to my discussion of the grounds of Appeal.

I shall consider all the grounds of Appeal concurrently as they raise a sole issue of whether the trial Court erred in setting aside the relevant consent decree. I note that a consent judgment/decree is derived from an agreement between the parties to compromise a suit on stated terms. In the authority of Attorney General and Another vs. James Mark Kamoga and Another, Civil Appeal No. 8 of 2014, the Supreme Court (per Mulenga, JSC) quoting with approval from Mohammed Alibhai vs. W. E Bukenya and Another, Supreme Court

**Civil Appeal No. 56 of 1996**, that a consent decree is passed on terms of a new contract between the parties to a consent judgment. Additionally, in the Kamoga case, the Supreme Court approved a statement from *Hirani vs. Kassam (1952)* 19 EACA 131 also quoting from a passage in the textbook of Seaton on Judgments and Orders, 7^th Ed, that a consent decree may only be set aside if it was obtained by fraud or collusion or by an agreement contrary to the policy of the court, or if the consent was given without sufficient material facts, or in misapprehension or in ignorance of the material facts, or in general for a reason which would enable a court to set aside an agreement.

As I stated earlier, one of the grounds that formed the basis of the learned trial Judge's decision to set aside the relevant consent judgment/decree was illegality arising from the fact that the judgment/decree was premised on a construction agreement made in favour of a non-existent company called Mt. Elgon Mission. In a passage from his ruling at page 210 of the record, the learned trial Judge stated as follows:

"A company is a legal entity capable of entering contracts, suing and being sued in its own name. The Companies Act, 2012 under Section 50 (1) provides that a company may make a contract by execution under its common seal or on behalf of a company, a person acting under its authority express or implied.

A company must be registered under the provisions of the Companies Act to carry out any of the above. Annexture 'F' is proof that Mt. Elgon Mission was not a registered entity at the time of entering the construction agreement therefore making it an illegality."

In Uganda Freight Forwarders Association and Another vs. Attorney General, Constitutional Petition No. 22 of 2009, the Constitutional Court held that it is an elementary principle of law that an unincorporated association is not a legal entity capable of suing or being sued. A suit by an unincorporated body is a nullity. In my view, by extension, it is also a nullity if a suit is based on a benefit accruing to a non-existent entity. In the present case, the basis of Civil Suit No. 46 of 2010 from which the consent judgment/decree arose was a benefit in favour of Mt. Elgon Mission, which was a non-existent party, and this rendered the suit and the consent judgment/decree illegal.

It is now accepted on the basis of the authority of **Makula International vs. His** Eminence Cardinal Nsubuga and Another [1982] HCB 11, that an illegality, if proven, taints a suit or any relief granted by the Court. In this case, the illegality referred to earlier tainted Civil Suit No. 46 of 2010 and the consent judgment/decree derived from it.

I noted Counsel for the Appellant's submission, citing the Supreme Court of Queensland authority of Stevens vs. Hoberg ST. R. QD 10 (per Philp, J) for the proposition that despite any illegality affecting a plaintiff's suit, the compromise of such a suit is valid provided it be *bona fide*, for it is public policy to uphold bona fide compromises. In other words, according to the authority of Stevens (supra), issues pertaining to illegality of a suit become irrelevant once parties make a consent judgment/decree. However, this position seemingly contradicts the position in the Makula authority which is to the effect that an illegality taints a suit and anything arising from it. Since the Makula authority is a decision of the Uganda Supreme Court and therefore, binding on this Court, I would prefer it to the Stevens authority.

I therefore, find that the learned trial Judge was right in finding that the relevant consent judgment/decree was premised on illegality, in that, the suit from which it arose was affected by illegality and in setting the consent judgment/decree aside for that reason.

I disallow ground 2 of the Appeal which is directly on this point. The findings on ground 2 render it unnecessary to delve into a discussion of the other grounds of Appeal and all the arguments of Counsel made thereunder.

Accordingly, I find no merit in the Appeal and would dismiss it with costs to the Respondent.

As Kazibwe Kawumi and Asa Mugenyi JJA both agree, the appeal is dismissed with costs to the respondent.

It is so ordered.

Dated at Kampala this... 2025. day of Cheborion Barishaki

**Justice of Appeal**

## ⁵ THE REPUBTIC OF UGANDA

## IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

## ctvtt APPEAL NO. 0074 0F 2021

## BETWEEN

## MICHEAL MUKHONO APPELLANT

AND

### ALICE KIMONO KIMASWA RESPONDENT

CORAM: HON. JUSTICE CHEBORION BARISHAKI, JA HON. JUSTICE MOSES KAZIBWE KAWUMI, JA HON. JUSTICE DR. ASA MUGENYI, JA.

## JUDGMENT OF MOSES KAZIBWE KAWUMI, JA

I have had the benefit of reading in draft the Judgment prepared by my learned brother the Hon. Justice Cheborion Barishaki, JA. lagree with the reasoning and orders he has proposed. I have nothing useful to add 20

.-raA Dated and delivered at Kampala this. 2025. d.y"r. Ftrl

25 Moses Kazibwe Kawumi Justice of Appeal

# THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA CIVIL APPEAL NO. 74 OF 2021

#### **BETWEEN**

#### MICHEAL MUKHONO :::::::::::::::::::::::::::::::::::

$\boldsymbol{\mathrm{V}}$

### ALICE KIMONO KIMASWA:::::::::::::::::::::::::::::::::::

(Appeal arising from the ruling and Orders of the High Court Godfrey Namundi, J dated 16^th December 2020 in *Miscellaneous Application 167 of 2021)*

### CORAM: HON. JUSTICE CHEBORION BARISHAKI, JA HON. JUSTICE MOSES KAZIBWE KAWUMI, JA HON. JUSTICE DR. ASA MUGENYI, JA

#### JUDGMENT OF JUSTICE DR. ASA MUGENYI, JA

I have had the advantage of reading in draft the judgement prepared by my Learned brother, Hon. Justice Cheborion Barishaki, JA. I agree with the reasoning and orders proposed.

It so ordered.

Dated at Kampala this day day 2024

Dr. Asa Mugenyi JUSTICE OF APPEAL