Hearing of Hamis Kiggundu's sh120b case against DTB starts Monday

The hearing of the sh120b civil suit between businessman Hamis Kiggundu and Diamond Trust Bank (DTB) starts Monday at the Commercial Court in Kampala.

Last Thursday, the Commercial Court head Justice Henry Peter Adonyo adjourned the case to tomorrow after Kiggundu's lawyer Fred Muwema asked the court for more time to iron out what he described as pertinent issues before hearing kicks off.

"My Lord, there are issues we need to iron out and we are praying for a shorter adjournment to resolve the matters because insisting on the trial today (Thursday)  is only going to waste the court's time," Muwema submitted.

However, the bank's lawyer Kiryowa-Kiryowa vehemently objected to the adjournment arguing that the case had a checkered history and needed to be fast-tracked.

In March this year, Kiggundu and his two companies Ham Enterprises Limited and Kiggs International (U) limited dragged DTB -Uganda, and DTB-Kenya to Commercial Court accusing them of fraudulently siphoning over sh120b from his accounts without his knowledge and consent.

Kiggundu contends that between February 2011 and August 2018 through his companies Ham Enterprise Limited and Kiggs International (U) limited sought and offered credit facilities by the banks for commercial construction, development, and completion of commercial properties.

Kiggundu claims that acting in good faith, he provided security for the facilities and executed mortgage instruments in favor of the banks and has been duly servicing the loans by way of interest payments on principle amounts, installment repayments on the principle sums.  

He, however, argues that despite honouring the loan obligations, the banks were purportedly enriching themselves by applying unlawful, unreasonable and unconscionable interest terms and purportedly took money from Ham Enterprise Limited, Kiggs International (U) limited accounts.

Court documents indicate that Kiggundu provided security/ mortgage comprised in Plot no.923, Block 9 located at Makerere Hill Road to support the credit facilities.

Kiggundu argues that he carried out an audit and reconciliation of their loan accounts which revealed that the banks had purportedly taken monies from the plaintiff's account totaling sh34b and $23, 46,670.

Kiggundu contends that the banks have fully recovered over and above what was due to them through the loan installments and interest repayments deductions from their accounts over the long period of the customer relationship period between the parties.

Kiggundu argues that following the impulse, he wrote to the banks demanding a refund of the monies illegally siphoned out their accounts and release of the securities but the bank purportedly ignored him and instead issued notices demanding for payment of $4,014,444 and $6,974,600 respectively.

Kiggundu avers that the banks deliberately and ill-intended took the money in questions which has purportedly occasioned him and his companies grave serious financial loss for which the banks are liable.   

Kiggundu argues that DTB Kenya could not conduct financial business in Uganda and therefore the transactions it contracted with them were entered into contrary to the Financial Institutions Act, 2004, and the central bank consumer protection guidelines, 2011.

Kiggundu wants a declaration that the banks breached the different loan agreements entered into with him between February 16, 2011, and November 16, 2019.

He further was an order for recovery of sh34b and $23, 46,670 being monies that were purportedly unlawfully appropriated by the banks from the plaintiff's loan accounts.

He also seeks a declaration that the banks' demand for $4,014,444 and $6,974,600 is illegal and unenforceable.  

He further wants a declaration that DTB Kenya is not licensed to conduct financial institutions business in Uganda and therefore the credit facilities that were offered by it to Ham Enterprise Limited were irregular, illegal, null, and void and unenforceable.

Kiggundu argues that the appointment of DTB Uganda by DTB Kenya as an agent bank and security agent in respect to its loan was illegal and in breach of the financial Institutions Act, 2004, and the central bank consumer protection guidelines, 2011.

He also wants an order for the unconditional discharge of mortgages created over the plaintiff's properties comprised in Kyadondo Block 248, Plot 328 land at Kawuku, FRV 1533, Folio 3, plot 36-38, Victoria crescent II Kyadondo and LRV 3176 folio 10, plot 923, Block 9 located at Makerere Hill Road and all cooperate and guarantees issued by the plaintiffs.

Kiggundu also wants an order for an audit and account of all the plaintiff's loan accounts for the period from February 16, 2011, to date ad a permanent injunction restraining the banks from enforcing the mortgages over the plaintiff's properties comprised in Kyadondo Block 248, Plot 328 land at Kawuku, FRV 1533, Folio 3, plot 36-38, Victoria crescent II Kyadondo and LRV 3176 folio 10, plot 923, Block 9 located at Makerere Hill Road.

Kiggundu accuses DTB (u) Ltd of facilitating and providing an illegal cover for Kiggs International (U) limited to engage in financial institution business in Uganda and various unethical acts of breach of trust, its fiduciary duty and contract.

Banks defence  

In their defence, however, the banks argue the case only seeks to delay Kiggundu's payment obligations and ought to be dismissed with costs because he purportedly failed to service credit facilities and is in default of payment obligations.

 According to the bank, Ham Enterprise Limited is indebted to a tune of $6,298,380 on term loan facility of $6,663,453, sh2.8b on the demand overdraft facility of sh1.5b, temporary demand overdraft facility of sh1b, 3,662,241 on the term loan facility of $4,000,000 and 4458,604 on the term loan facility of $500,000.  

The banks argue that Ham Enterprise Limited, Kiggs International (U) limited obtained credit facilities from them and provided securities in the form of property to secure the credit facilities.

"The terms of the credit facilities were freely and voluntarily executed by the plaintiffs, who certified that it received independent legal advice on the same and were not unreasonable or unjust as alleged," the banks contend.

Court documents indicate that DTB Uganda issued three credit facilities to Ham Enterprise Limited. They are term loan facility of $6,663,453, demand overdraft facility of sh1.5b, and the temporary demand overdraft facility of sh1b respectively.

On the other hand, DTB Kenya issued two credit facilities to Kiggs International (U) Limited. They are term loan facility of $4,000,000 and another one of $500,000.  The bank says this followed a request from the plaintiffs to finance its projects.

The banks argue that the facility agreements entered into between the parties are legally binding and enforceable under the law and that the deductions and charges made against the plaintiff's accounts were in accordance with the credit facilities issued to them.

The banks contend that regardless of the plaintiff's issuance of notices to them purporting to terminate their bank-customer relationships, they remain liable to settle their payment obligations and fulfill the terms of their mortgage instruments.

"The plaintiffs are at liberty to terminate the relationship but are obligated to settle any outstanding obligations," contend the banks.

The decision is matter is likely to leave one of the parties in irreparable damages. Kiggundu, 41, is currently involved in the construction of a multi-billion Ham Shopping Mall adjacent to Owiino Market in Kampala business center.  The land was given to him by the Government on a 49-year lease.