Court of Appeal Judges have set aside an order by Justice Henry Peter Adonyo of the Commercial Division of the High Court requiring Diamond Trust Bank (DTB) Uganda to refund tycoon Hamis Kiggundu aka Ham and his companies Ham Enterprises Ltd and Kiggs International Ltd Shs120bn.
In their judgement delivered today, Richard Buteera, Kenneth Kakuru and Christopher Izama Madrama agreed that Justice Adonyo had not granted DTB a fair hearing.
Justices Kakuru, Buteera and Madrama ordered for a fresh hearing into the matter.
“There was no need to enter default judgment which restrained the appellant from being heard. Appeal partially succeeds,” ruled Justice Madrama.
“Amendment of pleadings was beyond the scope allowed within the law. It changed the cause of action. Court could not order enforcement of contract said to be illegal. One party cannot benefit from an illegal contract. Appeal should succeed. He would order that the amended plaint cannot stand,” added Justice Kakuru.
“The claim was not a liquidated demand and it was wrong for the judge to enter a default judgment. Amendment of pleadings was irregular for changing the cause of action. Amended pleadings struck out. Appeal succeeds. Suit should be remitted to the High Court for hearing on the basis of original pleadings,” concluded Butera.
In 2020, Justice Adonyo had ordered DTB Uganda to refund over Shs120bn deducted from the tycoon’s accounts as the financial institutions sought to recover syndicated loans (offered by both DTB Kenya and Uganda).
DTB had deducted the monies — in both Shillings and dollars — from Ham Enterprises Ltd and Kiggs International Ltd, both owned by Ham.
The banks had extended loans to Ham through these two companies between 2011 and 2016.
DTB Kenya and DTB Uganda would later communicate their intentions to take over Ham’s properties over failure to clear Shs39bn in loans and interest payments.
But Ham quickly dismissed claims by DTB that he had failed to clear the loan and interest. He also alleged that the banks had deducted billions in excess from bank accounts of Ham Enterprises Ltd and Kiggs International Ltd.
But Ham could not get the Shs120bn and its interest of eight per cent — even with Justice Adonyo’s ruling in his hands.
He would need an order — and pray that no counter-order is issued against his.
Thus, DTB’s lawyers Kiryowa Kiwanuka and Usama Sebuufu outsmarted Ham’s led by Fred Muwema of Muwema and Company Advocates by securing an order staying execution of Adonyo’s ruling.
With Principal Judge Flavian Zeija’s order staying execution of Adonyo’s judgement, DTB Kenya and DTB Uganda comfortably proceeded to the Court of Appeal.
Zeija wanted court to determine two thorny issues: Were transactions between Ham Kiggundu (and his companies) and DTB Bank Uganda and DTB Kenya legal or illegal? Are foreign banks like DTB Kenya required to obtain a licence from the central bank before engaging in a deal like the one involving Ham, Ham Enterprises Ltd and Kiggs International Ltd?
Court of Appeal Battle of Minds
DTB’s Kiwanuka and Sebuufu argued before Court of Appeal Justices that High Court’s Adonyo ignored the question and evidence of breach of contract, fiduciary and statutory duties.
Sebuufu and Kiwanuka also told the bench that Adonyo did not task Ham, Ham Enterprises Ltd and Kiggs International Ltd to offer evidence of the claims they made against DTB Kenya and DTB Uganda.
They wondered why Justice Adonyo would want Ham, Ham Enterprises Ltd and Kiggs International Ltd to benefit from a transaction the companies referred to as an illegality.
For their part, Muwema and Company Advocates (representing Ham, Ham Enterprises Ltd and Kiggs International Ltd) sought to emphasize their argument that the transaction was an illegality: that DTB Kenya had no license to transact in Uganda.
Comments are closed.