Central Bank of Uganda (BoU) governor Prof Emmanuel Tumusiime Mutebile has responded to President Yoweri Kaguta Tibuhaburwa Museveni regarding the controversial sale of businessman Peter Kamya’s Simbamanyo House and Afrique Suites to tycoon Sudhir Ruparelia through an auction over a loan from Equity Bank.
Former Simbamanyo and Afrique Suites owners Kamya and Dr Margaret Munganwa had petitioned President Museveni to intervene and help them redeem their properties.
On September 3, 2021, Museveni ordered Mutebile to investigate the matter and report to him within one week.
And Mutebile has now finished and sent his report to Museveni.
In the report, Mutebile says Equity Bank auctioned Simbamanyo and Afrique Suites to the highest bidders in accordance with the Mortgage Act and the Mortgage Regulations.
Mutebile noted that between 2012 and 2014, Kamya and Munganwa secured a $7.1m loan from Equity Bank, mortgaging Simbamanyo House comprised in LRV 2220 Plot 2 folio Lumumba Avenue and Afrique Suites comprised in Kyadondo block 243 Plots 95, 958,2794,17800 and block 237 Plot 95 land at Mutungo.
BoU went on to report that in 2016, Simbamanyo owners defaulted on the loan facilities and moved to file HCCS No.544 of 2016 in court.
In his suit, Simbamanyo owners claimed that their accounts had been wrongly debited, prompting them to halt clearance of their credit facilities’ obligations.
An independent report undertaken by Ernest and Young indicated that the difference was just $442.
That in mid-2017, Equity Bank Uganda Limited began foreclosure proceedings against Simbamanyo to recover the outstanding loan and Simbamanyo filed Miscellaneous Application No.1159 of 2017 seeking a temporary injunction stopping Equity Bank Uganda Limited from foreclosing and selling the mortgaged property.
Months later in October 2017 Justice Billy Kainamura would deliver his ruling in the Miscellaneous Application No. 1159 of 2017.
Justice Kainamura ordered Simbamanyo to deposit 30 per cent of the outstanding loan amount failure of which Equity Bank Uganda Limited was free to auction the properties after 30 days from the date of delivery of judgement.
Instead of appealing Kainamura’s ruling, Simbamanyo owners, in November 2017, filed a Constitutional petition No.42 of 2017 (Simbamanyo vs Attorney General and Equity bank Uganda Limited before the Constitutional Court.
In this, they challenged the legality of rule 13 of the Mortgage Regulations 2013 which requires that defaulting mortgagors should deposit 30 per cent of the outstanding loan in order to block a public auction of the securities.
Simbamanyo Estates proceeded to inform, on November 16, 2017, Equity Bank Uganda Limited and Equity Bank Kenya Limited that it had appointed Nisk Capital as its advisors.
The Estate owners also told Equity Bank that Bank One Mauritius had agreed to give it a two-year loan to refinance the existing loans with Equity Bank Uganda Limited and Equity Bank Kenya Limited. Thank Bank One Mauritius would also offer more money to finish Afrique Suites.
All Bank One Mauritius needed was for Equity Bank Kenya Limited to provide it a stand by letter as a security for this loan. BoU used this explanation to tell Museveni that Equity Bank Uganda did not foreclose on the properties.
Equity Bank Uganda Limited went ahead and issued a notice of default to Simbamanyo Estates on June 04, 2020. Equity Bank Uganda noted that Simbamanyo had failed to service its loans and that the financial institution would soon foreclose and recover its money.
Two weeks later, on June 24, 2020, Simbamanyo reacted with Miscellaneous Application No. 394 of 2020. Through this, Simbamanyo sought a temporary injunction restraining Equity Bank Uganda Limited from foreclosing on the mortgaged properties.
Undeterred, Equity Bank Uganda, on July 04, 2020, relied on the Mortgage Act 2009, ordered for an independent valuation of the mortgaged properties.
Consequently, the forced sale value for Simbamanyo House was $4.6m while that for Afrique Suites was $4m.
Simbamanyo moved to file Miscellaneous Applications No.601 2020 August 13, 2020. In this application, Kamya and Munganwa sought to stop the auctioning of the two prime properties.
On September 2, 2020, the High Court, through a Registrar, granted prayers in Simbamanyo’s Miscellaneous Application No.601 2020, staying execution provided Simbamanyo paid 30 per cent of the outstanding loan amount of $10.5m.
Days later, Simbamanyo filed Miscellaneous Application No.678 of 2020 seeking for an interim stay of the orders of the Registrar authorizing the auction and Miscellaneous Application No. 679 of 2020 appealing against the decision of the Registrar.
Mutebile further narrated to Museveni that on September 07, 2020, High Court heard Miscellaneous Application No. 678 of 2020, upholding the ruling of the Registrar.
Simbamanyo was, once again, told to clear 30 per cent of the outstanding loan amount on or before October 07, 2020 or else forget his properties.
Simbamanyo requested for adjournment of Miscellaneous Application No. 679 of 2020, which request was granted.
Kamya and Munganwa went ahead and placed a Caveat Emptor advert in The New Vision.
On September 08, 2020, Equity Bank Uganda Limited ordered its lawyers to respond to a Caveat Emptor advert Simbamanyo published in the New Vision.
Equity Bank made it clear nobody would stop them from selling the two properties to recover their monies on October 8, 2020.
The bank went ahead, on September 08, 2020, through CL Risk Management Limited advertised the mortgaged properties for sale and informed the general public that the properties would be sold to the highest bidder on October 08, 2021.
Simbamanyo then ran to court again, filing Miscellaneous Application No.719 of 2020 seeking a stay of execution of the orders of the High Court judge in Miscellaneous Application No.678 of 2020 and also filed Miscellaneous Application No. 720 of 2020 seeking for leave to appeal against the ruling of the High Court judge in Miscellaneous Application No.678 of 2020.
The two applications were consolidated, and on October 06, 2020, the High Court issued his ruling in the consolidated Miscellaneous Application Nos.719 and 720 of 2020 dismissing both.
“Essentially the judge upheld the ruling of the Registrar that had ordered that Simbamanyo should pay 30 per cent of the outstanding loan amounts within 30 days of the date of his earlier ruling of September 6, 2020 otherwise the mortgaged property would be sold,” Mutebile told Museveni.
With Simbamanyo failing to pay the 30 per cent in the given time, and because there was no court order stopping the auction, Equity Bank sold the properties in accordance with provisions of the Mortgage Act and the Mortgage Regulations. Highest bidders Meera Investments Limited bought Simbamanyo House for $5m and Luwaluwa Investment Limited took Afrique Suites for $4.3m.
“It is important to note that this sale by public auction, as required by the Mortgage Act took place on October 8, 2020 within the six months period after the valuation report was made on July 4, 2020. The properties were also sold at prices above their forced sale value to Meera and Luwaluwa who were then registered on the same properties as the new owners,” the report to Museveni further reads in part.
With his properties auctioned, Simbamanyo filed Civil Applications No. 249 and 251 of 2020 in Court of Appeal against the ruling of the High Court judge in Miscellaneous Application Nos 678, 719 and 720 of 2020 on October 20.
“Simbamanyo and Peter Kamya not being satisfied with the sale filed a new suit against Equity Bank Uganda Limited, Meera, Luwaluwa and the Commissioner Land Registration under HCCS No.837 of 2020 alleging among other things that the sale was wrongful, the property was undervalued and praying that the transfer be reversed. Simbamanyo and Kamya also filed Miscellaneous Application seeking for a temporary injunction to reverse the sale of the mortgaged properties pending the hearing of the new suit HCCS No 837 of 2020,” the central bank further apprised the president on the matter.
“On December 17, 2020, High Court issued a ruling dismissing Simbamanyo’s application under Miscellaneous Application No.445 of 2020 which had been seeking to strike out the Written Statement of Defence filed by Equity Bank Uganda Limited and Equity Bank Kenya Limited and ruled that the main suit HCCS nO.198 of 2020 should be heard on its full merit. This original suit, HCCS No. 2020, is still ongoing and is next coming up for hearing in the Commercial Court on September 2021. On December 20, 2020, High Court issued a ruling refusing to grant Simbamanyo’s request for a temporary injunction under Miscellaneous Application No. of 2020, that the sale, transfer and registration of mortgaged properties into the names of Meera and Luwaluwa be reversed pending the hearing of HCCS No.837 of 2020.”
Months later, on January 07, 2021, Simbamanyo filed a notice of Appeal against the ruling of the learned Registrar refusing to reverse the sale and transfer of the mortgaged properties.
BoU further told the president that on February 17, 2021, Simbamanyo’s suit against Equity Bank Uganda Limited, Meera, Luwaluwa and the Commissioner in Application number HCCS No.837 of 2020, fell flat because Simbamanyo did not file summons for direction in time which meant that the suit against Equity Bank Uganda Limited, Meera, Luwaluwa and the Commissioner was dismissed and this was confirmed by an order of signed by the registrar of the High Court.
Not willing to go down without a fight, on February 21, 2021, Simbamanyo and Kamya appealed against the abatement and sought orders for a stay of execution pending the hearing of the Appeal.
Court declined to grant Simbamanyo the stay of execution orders.
“On July 30, 2021, the High Court judge dismissed the appeal that Simbamanyo and Kamya had filed against abatement with costs and HCCS No.837 of 2020. The suit against Equity Bank Uganda Limited, Meera, Luwaluwa and the Commissioner therefore, stands abated and dismissed from High Court,” noted Mutebile.
The central bank further noted that Kamya and Simbamanyo filed another suit against Equity Bank Uganda Limited, Meera, Luwaluwa and the Commissioner, HCCS No of 2021 on August 03, 2021 “on the same facts raising the same issues contained in the previous suit HCCS No. 837 of 2020 challenging the validity of the sale of the mortgaged properties.”
Additional Reporting: Courtesy