HAM-DTB Case: Court of Appeal quashes commercial court ruling, defers case for retrial

KAMPALA | COURT: The Court of Appeal in Kampala has deferred the HAM-DTB case in which City tycoon Hamis Kiggundu accuses Diamond Trust Bank Limited of funneling over UGX120bn shillings from his accounts.

The controversial case has now been deferred to the High Court for further hearing.

DTB Bank in 2020 run to the Court of Appeal challenging a lower court decision that directed that DTB refunds Shs 120 billion which was debited from the accounts of Hamis Kiggundu and interest of 8% (shs9.6 billion) as penalties.

In last year’s ruling, the High court Judge Henry Peter Adonyo faulted DTB Kenya for appointing its counterpart saying it had no license to carry out financial business in Uganda as per the financial institutions’ act of 2004.

And today, a panel of three judges of the Court of Appeal led by the Deputy Chief Justice, Richard Buteera, Justices Kenneth Kakuru, and Christopher Izama Madrama quashed the ruling of the Commercial Division of High Court and ordered for fresh hearing.

The judges faulted lower court decisions based on mere points of law rather than merit to come up with the decision it made against the commercial banks. Court also ordered Kiggundu to meet all costs that the bank incurred in the appeal.

In his ruling, Justice Christopher Izama Madrama said that there was no need to enter default judgment which denied DTB Bank a fair hearing.

Justice Kenneth Kakuru ruled that the amendment of pleadings was beyond the scope allowed within the law. “Court could not order enforcement of a contract said to be illegal. One party cannot benefit from an illegal contract. Question of whether a foreign bank can lend money in Uganda is based on law and fact and the Judge should have heard the case fully,” Justice Kakuru ruled.

Justice Richard Butera ruled that the lower court Judge needed to have set the case down for hearing before passing his judgement.

Background:

In February 2011 and August 2018, Kiggundu sought and offered $4,014,444 and $6,974,600 loans by the banks for construction of commercial properties. To secure the loan Kiggundu mortgaged 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, and Block 9 located at Makerere Hill Road.

DTB Kenya contacted its counterpart in Uganda to collect a loan facility from the Businessman. However DTB-Uganda insisted that it did not act as an agent of DTB-Kenya to conduct business in Uganda, but only sought its services as a collection agent for it to receive its payments from Ham Enterprises Limited.

In March, Ham dragged both banks to court for siphoning over sh120b from his accounts without his consent. He also wanted the court to declare that the bank’s demand for $4,014,444 and $6,974,600, which was advanced to him by DTB-Kenya, is illegal and unenforceable on the grounds that the Kenyan bank had no license to carry out financial business in Uganda.