The Commercial Division of the High Court has quashed the warrant of arrest issued against the Managing Director of Dei Minerals International, Mathias Magoola, over alleged failure to pay Shs268b as legal fees to former minister Isaac Musumba was irregularly issued.
Justice Anne Mugenyi, in his ruling, said that it was improper for the Registrar to entertain an application for execution of the arrest before completion of the recovery process of the said money.
“From the above provision, no decree shall be reversed or varied for errors except where the errors affect the merits of the case. However, in this instant case, even in the absence of the errors, it was improper for the Registrar to entertain an application for execution before completion of the recovery process in the UK Court. Therefore, the Ruling of the Registrar cannot stand,” Justice Mugenyi said in her ruling dated Monday, September 5, 2022.
The money in question accrues from a case where Musumba had represented Dei Minerals International in a legal dispute, from which the company is to be compensated $211m (Shs756.5b). Of this, Musumba is to be paid 30 percent.
Mr Magoola and his Dei Minerals International firm won the case against Videocon Industries Ltd, a UK-India based firm, for breach of contract.
But Musumba in February this year secured a warrant of arrest against Magoola, saying he had refused to honour the agreement to pay the legal fees. Magoola then went to court, arguing that the arrest warrant was irregular since he hasn’t yet secured the compensation money from the London firm, from which to pay the former minister.
And in her ruling, Justice Anna Mugenyi said the registrar erred in fact and in law to issue an arrest warrant against someone for a contingent debt that can only be enforced when Dei Minerals Ltd recovers the money, which they haven’t done.
“…payment according to the Consent is upon recovery of the decretal sum. This has not yet been done, and is still in process, therefore, I find that the application for execution was brought prematurely. In addition, the intention of the parties was that the Respondent be paid from the proceeds in the London Court, therefore, it is the duty of the Court to ensure that the parties stick to their agreement. There is no evidence to show that the said recovery has failed or that the Appellants recovered and failed to pay,” she ruled.
The judge added that according to the facts of the matter, it is clear there is a case in the Court in London, although it has been in abeyance. “Considering that the whole world has been going through the COVID 19 pandeinic which affected all systems, including the legal sector, it would be unjust and unfair to impute such delay on the Appellants,” Justice Mugenyi said.
Besides, she said the parties did not agree on the timelines within which the recovery should be done or even when the updates are made; or even the intervals of the updates.
“1 agree with submissions from Counsel for the Appellant payment of the Respondent is contingent upon recovery in London; and that recovery has not yet happened or failed so as to compel the Respondent to institute execution proceedings. Under Section 28 of the Cuntracts Act, the Consent Order between the parties shall only be enforced upon recovery of the money in London. Going by paragraph 6 of the Order. if the Appellants recover and fail to pay, then execution proceedinss can also be taken out. Annexure C-2 shows that the execution proceedings in London have been commenced; and in the absence of evidence of its completion and recovery by the Appellants with failure to pay, execution proceedings are prematurely taken out,” she added.
She then ordered Musumba to pay Magoola the costs of the suit.
The Commercial Division of the High Court had on February 24 instructed Twine Muganga, a court bailiff to effect the arrest of Magoola by March 25.
But Justice Anna Mugenyi had on Monday, March 28, 2022, issued a temporary injunction on the matter, ruling that if Magoola is jailed, then this would curtail his efforts to recover the monies.
“All in all, and from the fore-going, the Applicants have demonstrated that the present application is a proper case for granting an order for stay of execution, and the same is accordingly granted as prayed pending determination of the Appeal. Costs of this application shall be in the main cause,” she ruled.
“To this court, the applicants have satisfactorily demonstrated that they will suffer substantial loss if the warrant of arrest against the 2nd applicant is executed because not only would he be incarcerated and curtailed from following up; among other things, recovery of monies mount to satisfy the respondent’s claims as well as his own, which is the main gist of the Consent Order sought to be enforced,” she ruled.
“Having considered all the submissions and evaluated the evidence on record, I find that the Appeal has merits and succeeds on all the grounds. The Ruling of the Registrar in EMA No. 11 of 2022 allowing execution by warrant of arrest is hereby set aside and costs of the appeal be paid to the Appellants by the Respondent,” she added.
Magoola runs a multibillion pharmaceutical factory in Matugga, near Kampala. The multi-billion biological drugs and mRNA vaccine manufacturing facility was launched by President Museveni on July 6, 2021, and it is hoped that its construction would help “making Africa self-sustaining in health care, a giant leap”.