Bitature's Skyz Hotel lined up for auction over bank loan

Justice Stephen Mubiru has ruled that lawyers Robert Kirunda and Noah Shamah Wasige, representing South African money lenders Vantage Capital, were right to place businessman Patrick Bitature’s properties on auction for defaulting a loan.

Simba Group had sued Kirunda, Wasige, Festus Kateregga, the lawyer of Quick Way Auctioneers and Court Bailiffs, and the Commissioner Land Registration saying it was illegal and an improper use of process to advertise the sale of the properties by public auction.

On Wednesday 18th May, 2022 in the daily Monitor newspaper, acting on the instructions of Vantage, their lawyers advertised for sale by public auction, multiple properties belonging to Simba Group as mortgagors in default. The properties included; “Elizabeth Apartments” at Kololo in Kampala, “Protea Hotel-Naguru (Sky’s Hotel) in Kampala, and “Moyo Close Apartments,” Kololo gardens in Kampala.

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Simba Group, through their lawyers of M/s Muwema and Co. Advocates and Solicitors together with M/s. Mugisha and Co. Advocates, said Vantage was non-existent, yet the four advertised the property for sale. They said it not only occasioned severe damage to Simba Group’s names and business reputation, but also caused irreparable damage. “The advertisement was made for the sole purpose of embarrassing and irredeemably damaging the name and business reputation of the applicants,” they wrote.

The lawyers submitted that Simba Group has a pending suit which raises serous triable issues relating to the action of publishing a notice of sale. “The cause of action is a claim over unlawful intention to sell,” they said.

It all begins in December 2014 when Bitature’s Simba Properties Investment Company (SPIC) acquired a $10 million loan from Vantage of which he has “not paid back one cent” despite the loan term ending in 2019. The loan has since skyrocketed to over $32 million after accrued and compounded interest, and penalties kicked in.

In a high court ruling on May 9, 2022, Justice Musa Ssekaana declared the transaction illegal and untenable. “The applicant may indeed be a partnership in South Africa but it is not clear to this court whether it was registered or not in the same country or the same laws applicable in that country are in pari materia with the legal position in Uganda. Therefore this court will interrogate this fact to come to its finding and determination,” Justice Musa Ssekaana said halting the auction process.

However, Justice Mubiru in his ruling on June 15, 2022, said Justice Ssekaana was misled. He said the High Court is bound by decisions of the Supreme Court, the Court of Appeal and the Constitutional Court, but is not bound by other High Court decisions, declaring the auction as righful.

He said that in any event, a decision which is reached by manifest slip, error or glaring mistake, such that some part of the decision or some step in the reasoning on which it is based is found, on that account, to be demonstrably wrong, can be avoided.

“On the basis of the misconception of the non-existence of the mortgagee, the 1st and 3rd respondents (lawyers and auction firm) have been sued simply because counsel for the applicants consider them to be acting in their individual capacities since, in counsel’s view, M/s Vantage Mezzanine Fund II Partnership was in High Court Miscellaneous Cause No. 205 of 2022 declared no-existent. Firstly, a person who acts for a disclosed principal is not liable to the plaintiff in respect of particular transactions (see Friendship Container Manufacturers Ltd v. Mitchell Cotts (K) Ltd [2001] 2 EA 338),” Justice Mubiru said in his ruling.

He added “A person who acts as another’s agents in a transaction, with the knowledge of the plaintiff, is not liable to the plaintiff in respect of that particular transaction. In undertaking the impugned advertisement, the 1st to 3rd respondents acted as agents of M/s Vantage Mezzanine Fund II Partnership with instruction to enforce its rights as an unpaid mortgagee under the Mezzanine Term facility Agreement, which agreement specifies the corporate and human partners undertaking business under that name. At common law, in such circumstances the only person who can sue and be sued is the principal.”

Mubiru said abuse of process is described as misusing a criminal or civil process against another party for an unintended, malicious, or perverse reason or purpose, different from the proceeding’s intended purposes, which wasn’t the case.

“It is the malicious and deliberate misuse of regularly issued civil or criminal court process that is not justified by the underlying legal action. It involves an illegal or improper use of process, with an ulterior motive or improper purpose. There is no exhaustive list of situations where a court might stay a proceeding for an abuse of process, but includes litigation instituted in bad faith with the intention of delaying the delivery of justice.”

“Sometimes abuse of process may occur accidentally, such as where an honest belief in mistaken facts forms the basis of filing a suit against an improper party. Having analysed pleadings filed and arguments advanced by counsel for the applicants in previous and current litigation over the same subject matter, as well as their answer filed in response to the invitation to arbitration, it appears to me that the applicants are labouring under an honest but mistaken belief that it was decided by the Civil Division of this Court in High Court that M/s Vantage Mezzanine Fund II Partnership does not exist.”

“On basis of all the foregoing considerations, I found that this application and the underlying suit were entirely misconceived on account of the fact that they were instituted against agents of a known principal, and on ground that the matters placed in issue in the suit are already the subject of a subsisting arbitral process. This court had on two occasions before already declared that it will not exercise jurisdiction over the matter in light of the submission to arbitration that is valid, binding, operative and enforceable. I found it unnecessary in the circumstances to consider the rest of the criteria for the grant of a temporary injunction.”

“Having found that that this specific factual finding of my brother Judge is not evidence-based, and more so, it is not entitled to deference as a precedent binding on this court, I respectfully depart from it and find that there was no basis for counsel for the applicants to have chosen to file a suit intended to enforce what they considered to be a declaratory decision in that ruling,” Justice Mubiru ruled.

“In the result, I found that a prima facie case had not been established. There were no serious questions of law and fact to be tried by this court to justify the grant of a temporary injunction. The application was thus dismissed with costs to the respondents and the underlying suit was struck out with costs to the defendants.”