The Supreme Court in Kampala has directed the Commercial Court to have a retrial in a case involving City businessman Hamis Kiggundu alias Ham and Diamond Trust Bank Uganda and Kenya.
In their ruling delivered on Tuesday morning, five justices who include the Chief Justice Alfonse Owiny-Dollo, Lady Justices, Faith Mwondha, Percy Night Tuhaise, Justice Mike Chibita, and Stephen Musota ordered for the trial is remitted back to the High Court for trial before another judge; basing only on issues of fact arising from the pleadings.
Justice Tuhaise who delivered the unanimous judgement stated that the loan acquired by Kigundu from DTB Uganda and Kenya was legal.
“The issue of illegality having been resolved in this appeal, between the parties hereto, which was the genesis of the appeal to the Court of Appeal, and ultimately to this court, is remitted back to the High Court for trial before another judge; basing only on issues of fact arising from the pleadings,” CJ Owiny Dollo said in a lead judgement read for him by Lady Justice Percy Tuhaise
Kiggundu is seeking to recover more than 120 billion Shillings from Diamond Trust Bank Uganda and Diamond Trust Bank Kenya that he acquired between 2011 and 2016 to finance his real estate business.
Through his companies; Ham Enterprises and Kiggs International in 2020 dragged DTB Bank Uganda and Kenya to court for draining Shs34 billion and $23 million from his dollar account.
In October 2020, Commercial Court Judge Henry Peter Adonyo ruled in favor of Kiggundu, ordering DTB Uganda to refund all funds deducted from his accounts on grounds that deductions were illegal and made without Kiggundu’s consent.
However, DTB challenged the matter in the Court of Appeal and the the judgement was delayed. Kiggundu then appealed at the supreme court on grounds that the question of illegality was on handled during the court of appeal ruling.
While quoting the Financial Institutions (Limits on Credit Concentration and Large Exposures) Regulations of 2005, the Supreme court has ruled the two banking institutions, and Kiggundu’s companies with regard to the financial credit transactions carried out between and amongst them, was neither governed by the Financial Institutions Act, 2004, as amended, nor the Financial Institutions (Agent Banking) Regulations, 2017.
As such, the Supreme Court has indicated that they didn’t see how this arrangement and the transactions that were carried out pursuant thereto could be taken to mean that DTB Kenya carried out financial institution business in Uganda as per the said explanation.
“Similarly, clause 4 of the 2018 agreement which provides for servicing of the credit facilities by the 1st Appellant/Ham Enterprises through its accounts with the 1st Respondent for remittance to the 2nd Respondent’s escrow account held by the 1st Respondent, are textually the same as the corresponding provisions in the 2017 agreement”, reads the judgment.
It adds that “it is clear from the terms of the contracts that DTB Kenya did not receive or hold any deposits in Uganda, and indeed it did not advance the impugned credit facilities to the Kiggundu and his companies out of any such deposits since it had no authority to carry out financial institution business in Uganda”.
Secondly, the Court indicated that DTB Kenya did not advance the credit facilities directly to Kiggundu as these were instead routed through the DTB Uganda, which is a bank duly licensed to carry out financial institution business in Uganda and which then disbursed the funds to the company. Furthermore, the Court has indicated that Ham Enterprises Limited did not service the loan facilities by payment directly to DTB Kenya but rather through DTB Uganda as an agent of DTB Kenya in a fiduciary relationship.
As such, the court has ordered for fresh hearing and made several orders saying, the amendment of the plaint, which introduced the claim of illegality as a cause of action, was proper in law and the syndicated credit–facility executed between the banks with the Ham Enterprises Limited as an agent of the DTB Kenya is lawful and neither the Financial Institutions Act of 2004, as amended, nor the Financial Institutions (Agent Banking) Regulations, apply to them.
Below is the full judgement
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