Three justices of the Court of Appeal led by Justice Moses Kazibwe Kawumi, Justice Mike Musisi and Justice Dr Asa Mugenyi have stayed the execution of Shs1.4bn orders against city tycoon Amos Nzeyi until the appellant court pronounces itself on his legal battle.
Nzeyi through his lawyers led by David Nambale appealed to a panel of three justices of the Court of Appeal after both the Judge of the High Court and a single judge of the Court of Appeal dismissed the application for stay of the execution of the orders against him including payment of Shs828m to his business partner Menna Tewahade.
In their ruling, the judges stated that the decision of court directing Nzeyi to pay the Shs828m as whole sum before the determination of his liability case arising from his appeal was unfairly skewed in Tewahade’s favour who had already got close to 50% of the decretal sum.
“This in our view is irrespective of the fact that the Respondent still holds shares in his name which can be attached to recover the money in the event that the appeal succeeds,” the judges stated.
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They further stated that the agreement that the parties’ signed regarding when and on what terms the balance was to be paid was a material factor the single judge would have considered before dismissing Nzeyi’s application.
They further noted that the two parties entered the agreement well knowing that it violates the terms and conditions of the mother company, a serious issue which the Court of Appeal has to examine.
According to court documents, both Nzeyi and Tewahade are shareholders and beneficial owners in M/s Innscor (U) Ltd in which Tewahade also served as the Managing Director.
They entered a share sale agreement in which Tewahade agreed to sell all his shares to Nzeyi At a price of USD400,000 payable in instalments.
Nzeyi first paid USD50,000 to Tewahade at the execution of the agreement after which he immigrated to the United States of America.
Court documents show that Innscor (U) Ltd was operating a “Nandos Chicken land” which is a franchise under a Master Franchise Agreement with Nandos B.V of the Netherlands as his flagship business.
Tewahade was a signatory and surety to the franchise agreement in the capacity of a shareholder and managing director.
However, clause 18 of the Master Franchise Agreement forbade the shareholders and directors from changing the beneficial ownership of the company without the written consent of the franchisor.
The shareholders and directors were also obliged not to sell their interest in the business without offering the same to the franchisor.
When the franchisor learnt of the sale of shares and Tewahade’s resignation, the Master Franchise Agreement was terminated and the termination occurred before the payment of the first instalment in the said transaction.
Tewahade sued Nzeyi for the balance of the consideration for the sold shares and the Court established that the share sale Agreement was in
breach of the Master Franchise Agreement since the franchisor’s no objection was not sought prior to the sale of the shares.
In his argument, Nzeyi stated that Tewahade is an alien domiciled in the United States of America with no assets in Uganda which can be attached by him to recover his money when his appeal succeeds.
