The High Court’s Commercial Court has declined and dismissed an application by Simbamanyo Estates Limited, and its owner, Architect Peter Kamya to temporarily halt the transfer of two properties mortgaged by Equity Bank to recover USD10.8 million that the former borrowed and failed to repay.
The application for temporary injunction- Miscellaneous Application No. 1611 of 2021 arises from Civil Suit No. 0464 of 2021 in which Simbamanyo Estates Limited and its proprietor Peter Kamya jointly sued Meera Investments Limited, Luwaluwa Investments Limited, The Commissioner Land Registration and Equity Bank Uganda Limited seeking, a declaration that the sale by mortgagee of their properties comprised in LHR Volume 2220 Plot 2 Folio 33 Lumumba Avenue, otherwise known as “Simbamanyo House,” and Kyadondo Block 243 Plots 95, 487, 957, 958 and 2794 at Mutungo, otherwise known as “Afrique Suites Hotel,” was unlawful and fraudulent.
They are seeking recovery of that property, general and aggravated damages, a permanent injunction and costs.
In line with Section 33 of The Judicature Act, Section 98 of The Civil Procedure Act, and Order 41 rules 1 (a) and 2 (i) of The Civil Procedure Rules, Simbamanyo and its proprietor asked court for a temporary injunction restraining the respondents from “selling, alienating, mortgaging, transferring, encumbering or in any other way creating third party interests and rights” in Simbamanyo House and Afrique Suites until court rules on the allegations that the foreclosing on the two properties by Equity Bank was unlawful and fraudulent and therefore null and void.
In his ruling, Hon Justice Stephen Mubiru said that while there were triable issues on how the foreclosure of the properties was conducted, any arising losses, in case Simbamanyo and its proprietor won the cases, were capable of being quantified and sufficiently provided for via court awards for damages and costs. He also said that granting a temporary injunction as the main case went to trial, would have a disproportionate effect on the respondents than it would on Simbamanyo Estates and its proprietor and therefore ruled that the respondents be allowed to keep possession of the properties until court pronounced itself on the legality of the foreclosure.
Sale of mortgaged property was legal
During the hearing of the application, both Meera Investments and Luwaluwa Investments maintained that they legally bought Simbamanyo House and Afrique Suites hotel, at an auction conducted by Equity Bank as mortgagee and subsequently caused a transfer of the properties into their names and proceeded to take physical possession of the property. They also contested allegations that the sale was unlawful and fraudulent, and said that Simbamanyo had severally failed to prove the claims in previous related court cases and that therefore granting the said temporary injunction will have the effect of preventing them from enjoying and exercising its proprietary rights.
The Commissioner Land Registration also denied the claims by Simbamanyo, maintaining that it acted lawfully and within its mandate when it transferred the properties into the names of Meera Investments and Luwaluwa Investments Limited respectively, adding that the transferred was based on valid instruments of transfer presented to it. The Commissioner also argued that there was no imminent threat or attempts by Meera and or Luwaluwa to transfer the said properties further.
“There is no proof any irreparable injury likely to be suffered by the applicants in the event that the injunction is not granted,” the Commissioner Land registration argued.
Equity Bank also dismissed the application for a temporary injunction saying it was based on claims that Simbamanyo and its proprietor had failed to prove.
Letters to My Younger Self: What Uganda’s CEOs and Professionals Wish They Knew at the Start“Equity Bank lawfully sold off both properties as mortgagee at a public auction and the purchasers have since caused a transfer of the titles into their respective names and taken over physical possession thereof. Equity Bank has the capacity to indemnify the applicants if they succeed in their suit,” the bank argued.
Equity Bank also told court that Simbamanyo and Peter Kamya had previously attempted to sell off the properties to the Electoral Commission which is proof of the fact that the applicants are not interested in preserving the status quo and therefore granting the temporary injunction would irreparably interfere with the proprietary rights of Meera Investment and Luwaluwa Investments.
Simbamanyo’s lawyers, M/s Muwema and Co. Advocates, on behalf of the applicant submitted that there was a prima facie case to be tried and that therefore the preservation of the property is therefore in the interests of justice.
Court dismisses Simbamanyo’s application
Delivering his ruling, Justice Mubiru said that while Simbamanyo and Peter Kamya had showed that there was indeed a prima facie case (there are serious questions of law and fact to be tried )- one of the conditions necessary for granting an injunction, court would be able to sufficiently provide for any arising losses and or harm.
“If the applicants succeed, the court will be required to make an award of damages to compensate them as rights holders for economic injury suffered through the violation of property rights, if proved, and this is not such a daunting task. I therefore do not find this to be case in which the applicants are likely to suffer loss or injury that cannot be quantified by payment of money, or that is not readily calculated or estimated,” Stephen Mubiru ruled.
The judge said that the purpose of an injunction was to maintain status quo and the current status quo was that since 8th October 2020 the suit properties had been transferred and are in the physical possession of Meera Investments and Luwaluwa Investments. He also observed that while there was a need for court to protect Simbamanyo and Peter Kamya against, injury by violation of their claimed property rights, such need ought to be weighed against the corresponding need of the two respondents to be protected against injury resulting from being prevented from exercising their own legal rights, for which they may not be adequately compensated in damages.
“In light of the effect of the delays inherent in the administration of justice, a temporary injunction will have a disproportionate effect on the respondents (Meera Investments and Luwaluwa Investments) as an impediment from the pursuit of their proprietary rights, in a manner that would have the undesirable effect of pre-determining some of the issues due for trial. I therefore find that the balance of convenience in favour of the respondents,” the judge ruled.
“In light of all the foregoing, the order (temporary injunction), if granted, would inflict greater hardship than it would avoid, hence the balance favours not granting the temporary injunction order. The application is accordingly dismissed. The costs of this application will abide the result of the suit,” he ruled on the 12th day of April 2022.
