[2025] UGHCCD 46

**IN THE HIGH COURT OF UGANDA AT KAMPALA**

**[CIVIL DIVISION]**

**MISCELLANEOUS APPLICATION NO. 309 OF 2023**

**(ARISING OUT OF CIVIL SUIT NO. 273 OF 2019)**

1. **OFER SHAPIRA::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::APPLICANTS** 2. **ILAN ZIRI**

**VERSUS**

**UGANDA COMMUNICATIONS COMMISSION:::::::::::::::::::RESPONDENT**

**BEFORE HON. JUSTICE SSEKAANA MUSA**

**RULING**

This is an application brought by way of Notice of Motion under Section 98 of the Civil Procedure Act and Section 33 of the Judicature Act, Order 9 rule 12 and 27 and Order 51 rule 1 & 2 of the Civil Procedure Rules, for the Orders that;

1. *The proceedings, Judgment and Decree in High Court Civil Suit No. 273 of 2019 be set aside.* 2. *The applicants be allowed to file a written statement of defence and the matter be heard on its merits.* 3. *The costs of the application be provided for.*

The grounds to this application are laid out in the supporting affidavits of Oper Shapira an Attorney, founder and Managing Partner of Shapira & Co. Advocates in Israel but briefly they are that:

1. The I discovered a few months ago that a judgment was passed against Foris Telecom (U) Limited, the 2nd applicant, Yaron Farachi and the 1st applicant. I was never served with the judgment, or any other document related to this case were never served on me. The judgment was related to events that apparently took place more than 7 years ago and it required if effort to locate files, documents and references. 2. That I contacted a Ugandan Advocate Mr Kabiito Karamagi to obtain the information about the suit property and he established the Uganda Communications Communication filed a civil suit against Foris and others. 3. That in the said suit, the respondent sought to recover unpaid licence fees of 772,889,455/= invoiced for the period 2012 and 2013, interest from the date of the invoice till payment in full; general damages. 4. That in the said suit, the respondent also sought an order that the court lifts the veil of incorporation of Foris to hold the applicants liable with Foris and others on ground that they committed fraud. 5. That from the documents availed from court, the respondent served the summons to file a defence through substituted service by advertisement in Uganda’s local newspaper, the New Vision on 1st November 2019. The applicant did not read about the said service. 6. That being a Bankruptcy practitioner in Israel, on 2nd September 2014 the District Court of Tel-Aviv-Yafo, in its capacity as Bankruptcy Court appointed the 1st applicant as a temporary receiver of Foris Telecom Ltd which is the parent company of Foris, following the insolvency proceedings that started against the parent company by its main creditor. 7. That on 10th September 2014, the temporary appointment as a receiver was made permanent and that he had no previous business or affairs with Foris or its shareholders, and never had any personal interest in Foris and or its parent company. The only connection was through his professional appointment as an officer of the Bankruptcy Court; the court-appointed receiver of the parent company. 8. That even after the appointment, the applicants were not in direct management of the Ugandan entity. The affairs of Foris and day-to-day business with the respondent were run only by the management based in Uganda to wit; Yaron Farchi and Dr. Muballe Boysier in total isolation of the applicants who were based outside Uganda and only served as board members. 9. That on February 29, 2016 the Bankruptcy Court of Tel-Aviv ordered that operation of parent company should cease sinece there was funding to continue the operation of the parent company as a going concern. On 17th March 2016, the applicants ceased the operation with Foris. 10. That on 4th July, 2016 the District Court of the central District in Israel ordered the liquidation of the Parent Company. The Bankruptcy proceedings against Foris ended on 21st July 2019 and the parent company was permanently dissolved.

The respondent filed an affidavit by Victoria Ssekandi who is the Manager Compliance and Enforcement at the respondent;

1. That the respondent applied for substituted service when all reasonable efforts were made to serve the court processes on the applicants without any success due to their own decision to close the office in Uganda. 2. That the failure by the respondent to personally serve the applicants was caused by the applicant’s failure to maintain an active address in Uganda through which they could be contacted and served. 3. That the mere claim for the applicants to be living in Israel with no means of reading the Ugandan Newspapers is immaterial in so far as the applicants as directors, they had a legal duty to maintain an office in Uganda through which they could be served. * + 1. ***Whether there are sufficient grounds to merit the setting aside the Judgment in Civil Suit No. 273 of 2019 and allow the applicant file its written statement of defence?*** 2. ***What remedies are available to the parties?***

The applicants were represented by *Counsel Martin Kakuru* and *Counsel Muhirwe Duncan* while the respondent was represented by Counsel *Rita Zaramba Ssekadde*

In addition to consideration of the evidence on file, I have read with great care the submissions of both parties and to that end I hereby resolve the issues thus,

**DETERMINATION**

***Whether there are sufficient grounds to merit the setting aside the Judgment in Civil Suit No. 273 of 2019 and allow the applicant file its written statement of defence?***

Counsel for the applicants submitted that the applicants seek to set aside the judgment under Order 9 rule 12 of the Civil Procedure Rules upon just cause since the summons were not effectively served on the applicants. The summons served by way of substituted service in the New Vision News Paper were never effective since they are not residents in Uganda.

It was contended that the applicants were not properly served and that such service was and is not intended for parties outside jurisdiction. Secondly, the New Vision newspaper is not in circulation in Tel-Aviv in Israel.

The applicant’s counsel further submitted that the applicants have a plausible defence which denies any involvement in the management of the company and or refusal to pay the tax obligations in Uganda.

The respondent’s argued that the service on the applicants was effectual as provided under Order 5 rule 18 and in their view it was good service and effective. It was contended that the applicants indicated that they operated along Plot 9 Lourdel road Nakasero-Kampala. But by the time service was being effected the said premises were closed but one of the directors Dr. Muballe Boysier decided to file his defence in the matter whilst the applicants neglected to file.

The respondents contended that the applicants have no plausible defence and that the matter went a process of formal proof of the respondent’s claim. The respondent submitted further that the service was lawful and that the applicant have not shown any sufficient cause for their non appearance.

The respondent’s counsel submitted that the applicants as directors of the Foris where responsible for the non payment of the fees since they were responsible for the management of the company affairs.

***ANALYSIS***

The applicants have proved to this court that they are not resident in Uganda which means that they could not have known about the substituted service which run in the New Vision. As residents of Israel Tele-Aviv a substituted service as ordered by court could not have been effective. In the ***Geofrey Gatete vs William Kyobe [2007] SCCA No. 21 of 2007***, the Supreme court noted that ‘effective’ means having a desired effect or producing the intended/desired effect.

The substituted service on the applicants was a proper service until the applicants cast it in doubt when they brought out facts to prove that they were not within the jurisdiction of the court in order to make the substituted service effective. The applicants are non-resident in Uganda and were operating the parent company in Israel and it would indeed be unfair to impute knowledge on their part about the current proceedings.

It bears emphasis that substituted service is not intended for parties out of the jurisdiction of the court but rather person deemed to be within the jurisdiction and cannot be reached through the ordinary modes of service and this cannot be rendered proper service or effective service. See ***David Sessanga vs Greenland Bank (In Liquidation) HCMA No. 406 of 2010***.

In the circumstances, the service on the applicants outside jurisdiction by way of substituted service was not effective.

Secondly, the applicants contend that they were merely appointed by the Bankruptcy Court of Israel in Tel-Aviv and that is how they became shareholders in the parent company of Foris. They denied ever being in direct management of the company in Uganda. The affairs of Foris and day-to-day business with the respondent were run only by the management based in Uganda to wit; Yaron Farchi and Dr. Muballe Boysier in total isolation of the applicants who were based outside Uganda and only served as board members.

The applicants’ assertion is valid and they ought not to be condemned for the ills of the company which was wholly managed by different person who were based in Uganda. In addition, the That on 10th September 2014, the temporary appointment as a receiver was made permanent and that he had no previous business or affairs with Foris or its shareholders, and never had any personal interest in Foris and or its parent company. The only connection was through his professional appointment as an officer of the Bankruptcy Court; the court-appointed receiver of the parent company.

Since the applicants were Insolvency practitioner and only got involved after the parent company went into receivership, it would be unfair to extend the liability of the company which was incurred before, the applicants got into affairs of the parent company in Israel. The applicants have denied being involved in the management of the company affairs in Uganda and it a total denial of the indebtedness and responsibility. See ***Kabagenyi Teddy Onyango v Fina Bank (U) Ltd HCCS No. 70 of 2012***

The other two directors have been shown by evidence to have been the directing mind of the subsidiary company in Uganda. The liability should be confined to the two directors- Yaron Farchi and Dr. Muballe Boysier instead of spreading across to all other Board members of the parent company in Israel.

**What are the remedies available to the parties.**

The **Judicature Act** under **Section 33** provides that:

***“The High Court shall, in the exercise of the jurisdiction vested in it by the Constitution, this Act or any written law, grant absolutely or on such terms and conditions as it thinks just, all such remedies as any of the parties to a cause or matter is entitled to in respect of any legal or equitable claim properly brought before it, so that as far as possible all matters in controversy between the parties may be completely and finally determined and all multiplicities of legal proceedings concerning any of those matters avoided.”***

This court has powers under **Section 98 of the Civil Procedure Act, Cap. 71** to make such orders as may be necessary for the ends of justice as well as under **Order 9 Rule 12 and 27 of the Civil Procedure Rules** to set aside exparte Judgment or decree on sufficient cause being shown.

Considering as the applicant was not properly and effectively served and the plausible defence of not being responsible for the day-to-day management of the affairs of the company, the court sets aside the judgment and decree against the two applicants.

Application is allowed with no order as to costs.

I so order,

***Ssekaana Musa***

***Judge***

***This ruling has been delivered by the Registrar this……. February 2025***