City businessman Haruna Sentongo the proprietor of Haruna Enterprises Uganda Limited is smiling from ear to ear after bagging the first win in the Shs10bn legal fight against Diamond Trust Bank (DTB) Uganda and Kenya branches respectively.
Justice John Oscar Kihika of the Court of Appeal which also doubles as the Constitutional Court has issued a temporary injunction restraining the bank’s agents, representatives, nominees assignees and/or successors in title from selling, transferring, alienating, evicting, dealing with and or in any way interfering with Sentongo’s interest and possession of the properties comprised in Block 12 Plots 538, 826 and 898 at Mengo until the determination of appeal against the the Commercial Division of the High Court Judgment.
Sentongo through his lawyers lead by Commercial law giant Derrick Bazekuketta filed an application to the Court of Appeal alleging that his multibillion property is under a serious threat as banks have sent brokers to inspect the property with the suitable buyers claiming that it was available for sale on orders of the court.
In his affidavit, guided by Bazekuketta, Sentongo pleaded to Court to stop the selling of his property insisting that his appeal is meritorious and he has higher chances of winning the appeal against the bank.
He explained to the presiding justice at the Commercial Division of the High Court erred in law and in fact when he dismissed his entire case on technicality because he failed to honour his directive to fiIe trial bundle within the timelines he directed noting that to his surprise even the bank didn’t file the said trial bundle.
He insisted that his failure was caused by the grant of an order for leave to amend his plaint and the subsequent pleadings.
However, the bank through their lawyers led by Stephen Zimula protested the application relying on the affidavit of Emajeit Mbabazi. Zimula raised two preliminary points of law insisting that the application is incomplete before the Court of Appeal.
In his submissions, Zimula told Court that the said application was supposed to be first filed in the High Court before proceeding to the Court of Appeal insisting that the Order issued by the High Court is a negative order that is not capable of being stayed.
Counsel informed Court that the rule against issuing a stay order in respect to a negative order cannot be circumvented merely by terming the order sought as an injunction.
In reply, armed with a number of authorities, Bazekuketta told Court that in an application for temporary injunction, it is not mandatory for the Applicant to first file the Application at the High Court noting that laws and rules allow him to rush to the Appellate Court directly.
He also argued that his application before the said Court is one seeking for a temporary injunctive order and the same is validly before the court.
He explained to the Court that his application is for a temporary injunction and not an order of stay of execution of a negative order.
He pleaded with counsel Zimula to carefully revise his law books so that they help him not to confuse an application for stay of execution with an application for a temporary injunction.
Justice Kihika agreed with counsel Bazekekutte’s submissions noting that it would not be possible for Sentongo to file an application for a temporary injunction in the High Court in the absence of a pending suit explaining that the only option available to him was to file the application before the Court of Appeal.
“I therefore found that this application for a temporary injunction is properly before this court. The first preliminary point of law is thus over ruled,” the judge stated in his ruling.
He further disagreed with counsel Zimula’s argument that Sentongo’s application is seeking a stay of a negative order of dismissal which is not capable of being stayed explaining that it is clear that the application seeks an order for a temporary injunction against the bank restraining its agents and other people working in the bank’s interest from interfering with his interest and possession of his properties comprised in Block 12 Plots 538, 826 and 898 at Mengo until the termination of the appeal.
Justice Kihika explained that a temporary injunction is intended to maintain the status quo of things pending the determination by court of some serious cause pending before it.
He noted that the granting of a temporary injunction is an exercise of judicial discretion and the purpose of granting it is to preserve the matters in the status quo until the question is investigated in the main suit and disposed of.
He cited the conditions for the grant of a temporary injunction which include; the applicant must show a prima facie case with a probability of success and that such injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury which would not adequately be compensated by an award of damages.
He further stated that a temporary injunction can be issued and if Court is in doubt, it would decide an application on the balance of convenience. He added that a temporary injunction is granted so as to prevent the ends of justice from being defeated.
On the issue of likelihood of success, Justice Kihika stated that Sentongo stated in his affidavit in support of his application that the appeal is meritorious, raises serious questions for determination of the Court of Appeal and has a high likelihood of success.
He further agreed with Sentongo who stated that on 30th March, 2023, his matter came up for hearing and timelines were issued by the trial judge of the High Court on when to file witness statements, trial bundles and a joint scheduling memorandum.
He added that On 14th April, Sentongo filed his witness statement and on 18th he applied for leave to amend the plaint, which leave was granted.
Following the grant of his application, an amended plaint was filed on 21st June 2023 and in November, the bank filed an application seeking for further and better particulars.
On 29th November, 2023, the trial Judge dismissed the suit under Order 1 Rule 4 of the Civil Procedure Rules.
In conclusion, Justice Kihika therefore considered that Sentongo has convinced Court that he has a prima facie case pending determination of his appeal before the Court of Appeal.
On the issue of whether Sentongo will suffer irreparable damage or that the appeal will be rendered nugatory when the temporary order is granted, Justice Kihika base on Sentongo’s affidavit where he stated that he acquired the suit land in 2014 and it took him over 5 years to develop the same with a market he named ‘Nakayiza’ after his mother.
He added that he has a sentimental attachment on the property that cannot be compensated for in damages if the property is sold. The property in the instant case is a commercial building with a market whose rent proceeds can be ascertained.
“In my understanding, the applicant has to show that the damage bound to be suffered is such that it cannot be undone. It is therefore my considered view that the Applicant will suffer irreparable damage if this application is not granted,” the justice ruled.
On the issue of balance of convenience, Justice Kihika explained that it is determined to lie more on the one who will suffer more if the bank is not restrained in the activities complained of in the said case insisting that the balance of convenience favors Sentongo if the application is not granted.
He based on the evidence that Sentongo is in possession of the suit property which is a commercial building with various tenants carrying out business and the sale of the property will be to the detriment of him. That is why he wants to maintain the status quo until the determination of the appeal pending before the Court of Appeal.
Court records seen by the mighty Grapevine indicate that in 2015, Sentongo approached the bank for a financial facility for completion of the commercial blocks for Segawa Market which was to be rented out to tenants to derive rental income.
Both parties executed a facility in a letter dated 22nd February, 2016, for a Loan of Shs5bn and it was agreed that the facility would only be serviced through rent collections from the market if the bank funded the development.
Sentongo claims that the bank breached the facility contract by failing to disburse the agreed sums of monies.
Court documents show that Sentongo told the Commercial Division of the High Court that the bank would purport to credit his bank account, and synonymously liquidate the loan, paying itself back immediately with the sums credited, and the sums it would repay itself were always reflected as “Loan amounts recovered”.
The bank on the other hand, according to court documents claimed that between February to October 2016, Sentongo was granted several loan facilities and at his request, they were consolidated into one term loan with a single monthly instalment amortized for a period of five years.
He however, failed to meet his loan repayment obligations consequent upon which the bank issued him two notices of default.
The bank further claimed that when they started the process of recovering their sum of Shs10bn, Sentongo decided to institute a lawsuit and was defeated at the Commercial Division of the High Court.
By Sengooba Alirabaki
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