Acting on behalf of Simba Properties Investment Co. Ltd, Simba Telecom Limited, Linda Properties Limited, Elgon Terrace Hotel Limited, Patrick Bitature, and Carol Bitature, Muwema Advocates filed an application in the High court seeking orders to stop Vantage and six others including its lawyers from proceeding with a case of fraud they had filed in the Buganda Road Chief Magistrate’s court.
The petitioners accused Bitature and his wife Carol of fraudulently changing the shareholding of the said companies contrary to a loan agreement they had signed in 2014 that saw their companies receive $10million whose collateral was the company shares.
In their countersuit against Warren Van Der Merwe, Derek Alexander, Siyanda Khumalo, Robert Kirunda, Diana Kasabiiti, and Moses Muziiki, Bitature and his wife Carol alleged that if allowed to proceed, the criminal proceedings would tarnish their reputation. They also alleged that such a criminal proceeding was contemptuous to a High court ruling, that ordered the parties to go for arbitration in their commercial dispute over the loan.
However, in his ruling, justice Mubiru held that for anybody to apply for interim orders stopping a lower court from proceeding with a matter, they must have a properly filed suit before the lower court. But in Bitature’s case, he discovered that there was no pending issue before the court that the interim order can be based on.
He argued that an interlocutory injunction is an equitable remedy that aims to preserve the status quo by preventing one party from committing, repeating, or continuing a wrongful act prior to the trial.
“It is an order made at an interim stage during the trial and is usually issued to maintain the status quo until judgment can be made. For that reason, there must be a subsisting suit pending before the court, from which the application is sought, that forms the basis from which the interlocutory application arises…In the instant case, the application in its heading references High Court Miscellaneous Application No. 201 of 2020. A ruling in that application was delivered on 16th June 2021 whereupon the court became functus officio,” he said.
Adding that “There is nothing pending determination in that application. The affidavit in support of the application cites Miscellaneous Application No. 408 of 2022 as the pending application for contempt of court order to issue against the respondents. Examination of the Electronic Court Case Management Information System (ECCMIS) of this court reveals that both at the time of hearing and at the time of writing this ruling, no such application has been registered. In short, there are no pending proceedings in this court from which this application arises. The application is therefore fundamentally misconceived from the outset.”
It is for that reason that the judge faults Bitature’s lawyer for trying to mislead the court on a matter they know is not true. Mubiru said it is under rare circumstances that lawyers are condemned to pay costs.
“Generally, the court is slow to penalize counsel with the burden of having to pay the costs of litigation out of his or her own pocket, unless the circumstances of the case are such that justice demands that it be done. An advocate should not be held to have acted unreasonably simply because he or she acted for a client who has a bad case, but it would be quite different if the advocate gives his or her assistance to proceedings that are an abuse of process. I find that in filing this application, the advocates’ default rises to a “rare and exceptional” level.
Basic professional competence demands that an advocate seeking interlocutory relief should first establish that there is a substantive matter pending before the court, which they did not. Basic professional competence further demands that an advocate seeking the intervention of this court in proceedings pending before a magistrate’s court should do so by invoking its prerogative or supervisory powers, and not otherwise,” Mubiru ruled.
He adds that it was also extremely unbecoming of Bitature’s lawyers to join as respondents; Vantage’s lawyers whose only role was to facilitate their client’s cause, thereby seeking to restrain them from carrying out their duties as officers of the court.
“It is an advocate’s professional responsibility to ensure that all suits and applications filed possess a proper legal basis, yet this application is entirely misconceived and devoid of legal foundation. This application catastrophically lacks a legal basis. The legal costs and time wasted in this litigation could have been avoided entirely if the applicants’ advocates had discharged their duties to the expected minimum standards of professional competence. It qualifies as a “rare and exceptional” case where it would not be fair for the applicants to bear the costs. The costs must be met by the applicants’ advocates in person,” Mubiru held.
Background
On December 11, 2014 Simba Properties Investments Co. Limited a company owned byBitature and wife Carol borrowed $10 million from Vantage to finance their real estate business including Skyz hotel.
They were supposed to start paying back the interest but until now, they have paid neither the interest nor the principal. This has led to the loan growing to as much as $34million. As security for the loan, they offered their shares in Linda Properties Limited, Elgon Terrace Limited, and Simba Properties Investments Co. Limited and Simba Telecom Limited.
The agreement that they signed among others prohibited the transfer or alteration of the charged shareholding in the Simba companies. However, according to the criminal proceeding in the Magistrate’s court, the two proceeded and altered the shareholding allegedly with the view of defrauding Vantage.
But the criminal proceeding came at a time when the parties had been locked in an arbitration battle following the ruling of the High court in Vantage’s favour that the same court has no jurisdiction to hear the conflict owing to an arbitration clause in the loan agreement.
So, by proceeding with a criminal case, Bitature argued, Vantage was going against the court ruling that told the parties to solve their disputes through arbitration.
But justice Mubiru trashed this reasoning. “It is evident upon a comparison of the two processes that the points involved in both proceedings are not identical. The two processes have distinct impetus and objectives. While the arbitral proceedings relate to disputes arising between the corporate parties to the agreement concerning its existence, validity, interpretation, performance, breach or termination, and non-contractual obligations arising out of or in connection with it or the consequences of its nullity, the intended private prosecution seeks to penalize the directors of the borrower for what the lender considers to be fraudulent conduct subsequent to the agreement. It is not manifestly clear that the two processes cannot go on at the same time,” Mubiru said.
For more than a week now, the media has been awash with stories about Bitature’s dispute with his financers. This started after the media carried an advert where some of Bitature’s properties were up for action if he fails to pay his creditors in 30 days.
Bitature and Fred Muwema, his lawyer both said the advert was malicious and aimed at tarnishing his good name. Muwema particularly argued that Vantage had no legal claim over Bitature because High court judge Musa Ssekaana had ruled that the company had no legal basis in Uganda to sue or be sued because it was not registered.
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