Judge refuses bribe, halts Commercial court order in Ham-DTB case

Kampala, Uganda | THE INDEPENDENT | The Principal Judge Dr Flavian Zeija has stayed the implementation of Commercial Court orders directing Diamond Trust Bank Uganda and Diamond Trust Bank Kenya to refund 120 billion shillings and to return properties to businessman Hamis Kiggundu.

The Principal Judge on Monday issued the orders following a successful application by the two banks which wanted the execution of the orders stayed until the determination of their appeal before the Court of Appeal.

The ruling stems from the decision last month by Commercial Court Judge Dr Henry Peter Adonyo ordering DTB Uganda to refund all money deducted from Kiggundu’s accounts in a case involving a syndicated banking agreement between DTB Uganda and DTB Kenya.

Kiggundu through his companies; Ham Enterprises and Kiggs International, had sued DTB Bank, accusing the banks of illegally taking away more than 120 billion Shillings from his bank account in Uganda.

Kiggundu said that between 2011 and 2016, his companies were given loans totaling to 41 billion shillings and he deposited with the banks several properties as security. However, Kiggundu told court in his petition that as his companies were repaying the loans, he realized that the banks had not disbursed the money, yet it was reportedly being removed from his accounts without his knowledge and consent.

As a result, Kiggundu argued that 34 billion shillings was illegally removed from his shillings account and 23 million dollars from the dollar account and that he had also cleared the loans in question.

Following this, the Commercial Court Judge Adonyo agreed with Kiggundu and ruled that the credit facilities offered by DTB-Kenya to Kiggundu were illegal since DTB Kenya is not licensed to carry out the financial institution business in Uganda.

Adonyo also ordered the banks to return the properties that Kiggundu had mortgaged, refund the money the banks had deducted illegally from his accounts. The Judge also awarded costs to Kiggundu and imposed an interest of eight percent on the money and several declarations.

But the banks through their lawyers led by Kiryowa Kiwanuka petitioned the Principal Judge Dr Flavian Zeija asking him to issue orders such that they do not implement Justice Adonyo’s decision.

Kiryowa Kiwanuka argued that if the application is not granted, the banks were to suffer substantial loss by being required to pay 120 billion shillings and approximately 9.6 billion shillings in interest on top of releasing the securities deposited with the bank.

Kiryowa Kiwanuka also noted that the decision was to have far reaching implications on the entire banking sector in Uganda if implementation is done before their appeal which has high chances of success.

In his ruling, the Principal Judge Dr Zeija noted that the orders need to be stayed because Justice Adonyo issued orders in favor of one party in a transaction that he found illegal and he made no mention of the sums Kiggundu borrowed.

Here, Dr Zeija said it is important to stay the implementation so that the Court of Appeal can first determine whether the transaction was illegal since it remains an issue of contention in as far as the Contract Act of 2010 is concerned. He said this is because the records show that the banks received independent advice from lawyers before signing the agreements.

Justice Zeija also said the Court of Appeal also needs to first answer the question of agency banking, whether foreign banks that are not trading in Uganda are required to obtain a license from Uganda to execute a contract. The Principal Judge explained that Bank of Uganda recently released a statement indicating that the license was not required in the transaction under dispute adding that the court of appeal has to first determine whether Bank of Uganda was right or not.

The Judge has also reasoned that there is a serious threat of execution of the orders because he has already learnt that shortly when he issued an interim order staying execution last month, Kiggundu’s lawyers secretly extracted an order signed by the Acting Registrar Lillian Bucyana without court files yet they were already before him and he only learnt about it in the DTB application.

Like it is usually the practice to deposit money to court before proceeding to appeal, the Principal Judge has said it’s not necessary here since the banks have the capacity to pay Kiggundu his money should the Court of Appeal confirm the Adonyo decision.

He also added that there is a possibility of vacating the mortgages and it would create more hardships in case the Court of Appeal quashes the decision by the lower court.

But the Judge also said he was extremely surprised by one of the parties in this case sending him agents with financial proposals in order to influence his decision. Zeija said “this was disgusting to the least,” however he didn’t name which party offered him the bribe.

The Principal Judge’s decision which is going to be in place until the determination of DTB’s court of Appeal case has been read to the parties by his private Legal Secretary Julius Mwesigye.

But Kiggundu’s lawyers led by Fred Muwema say they are going to appeal against this decision because the Principal Judge’s conduct in this file was wanting.

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