Supreme Court blocks sale of businessman Ssentongo’s property

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The Supreme Court has temporarily stopped the sale of businessman Haruna Ssentongo’s property over a sh10.3 billion debt owed to I&M Bank Uganda Limited, formerly Orient Bank Uganda Limited, giving the businessman a sigh of relief.

Ssentongo’s multibillion properties that are at the risk of attachment by the bank to recover its money are comprised in Kibuga block 12 plots 250, 251 and 252 land at Mengo-Kisenyi in Kampala. Ssentongo is a brother to renowned businessman Hamis Kiggundu.

Issuing a temporary injunction stopping the bank or its agents from interfering with Ssentongo’s property in a ruling dated May 9 this year, Supreme Court Judge Catherine Bamugemereire said if the attachment of property goes on, it will render Ssentongo’s appeal nugatory.

“I would like to note that although this application is not an application for stay of execution, it is an application seeking injunctive relief from the threat of execution that would result in making the appeal nugatory. I find that the applicant has sufficiently demonstrated that this application is warranted,” Justice Bamugemereire ruled.

Justice Bamugemereire said that the temporary injunction shall remain in operation for a period of only four months or until the appeal is heard and determined by the apex court.

Justifying the issuance of the temporary injunction, Justice Bamugemereire said Ssentongo demonstrated both a likelihood of success and substantial loss.

Additionally, Justice Bamugemereire said Ssentongo filed the application promptly without undue delay.

Justice Bamugemereire relied on the 1990 court decision in the case of Francis Hansio versus Nuwa Walakira where the Supreme Court held that it would be unwise in some circumstances to defeat a statutory right of appeal by for example demolishing the subject matter of the suit so that the appeal is rendered nugatory.

While the bank, citing Regulation 13 of the Mortgage Regulations, wanted the court to order Ssentongo to first pay 30% of the outstanding loan, Justice Bamugemereire found strict adherence to the provision requiring assessment within the context of procedural compliance.

“The applicant has contested the respondent’s failure to follow statutory requirements, including conducting a valuation report. In such circumstances, enforcing Regulation 13 as an absolute requirement may not be justified in this instance,” Bamugemereire noted.

While the bank, through its lawyer Derrick Bazekuketta had challenged the legality of the application by Ssentongo arguing that it was procedurally flawed, Justice Bamugemereire said rule 41(1) of the Supreme Court rules empowers the court to entertain such applications when necessary to safeguard the right of appeal and ensure that justice is served.  Bruce Musinguzi from Kampala Associated Advocates represents Ssentongo in the case.

The Court of Appeal decision

In March this year, the Court of Appeal dismissed Ssentongo’s appeal over the matter. Justices Cheborion Barishaki, Christopher Gashirabake and Dr Asa Mugenyi noted that upon re-evaluation of the evidence on record, they discovered that Ssentongo failed to prove his claims against the bank and his case was rightly dismissed by the High Court.

However, the court of appeal slashed the interest on which Ssentongo is supposed to pay to 12.5% from 22% per annum from the date of default until payment in full.

The court also awarded the bank sh150m in damages at an interest rate of 6% per annum from the date of judgement until full payment.

In 2019, Ssentongo dragged the bank to the Commercial Division of the High Court seeking reimbursement of sh10.3b, accrued interest, general damages and costs of the suit, accusing the bank of breaching the terms of the contract after taking a loan from them.

However, in December 2022, Justice Richard Wejuli Wabwire dismissed the case, ruling that he (Ssentongo) was the one indebted to the bank to the tune of sh10.3b. Dissatisfied with the decision of the lower court, Ssentongo lodged the appeal.  

Background

Around 2015, Ssentongo obtained credit facilities amounting to sh1.8b in addition to an overdraft of sh150m from the bank to finance the development and completion of a commercial property on the land comprised in Kibuga block 12 plots 825 known as Nakayiza mall and as finance working capital for his imported garments in his trading business.

Between November 2015 and January 2016, Ssentongo sought additional financing amounting to $3000,000 from the same bank for the purposes of completion of another property on land comprised in Kibuga block 12 plots 250 and 251 known as Ssegawa market.

Ssentongo argues that at the request of the bank, he presented bills of quantities for the construction and that Ssegawa market was to be developed with 250 shops, generating a minimum of sh500m in rental income per year.

However, Ssentongo accuses the bank of mismanaging the project by allegedly failing to honour its obligations by allegedly failing to disburse the entire sum as agreed upon.

Ssentongo claims that the bank, through extortionate schemes coupled with economic duress, undue influence, bad faith, ill advice, and total dishonesty using its bargaining position, contracted him into financial facilities of very unfair, unconscionable, inadequate and extortionate and unclear terms and conditions with purpose to unjustly enrich itself to his detriment.

Ssentongo also argues that the bank perpetually breached its statutory duty, contractual and fiduciary duties and also made irregular and fraudulent transactions on his bank accounts, which complicated performance and exposed him to loss of income, risk exposure, psychological torture and mental anguish.