The Court of Appeal has dismissed an application in which proprietors of Simbamanyo Estates Ltd were asking the court not to grant legal costs to Equity Bank that had won a case to auction their property over unpaid loans.
The bank won a civil case to auction the properties in Kampala to recover outstanding loans of $10.8m (about Shs40b). Simbamanyo filed an application in court seeking to stop the auction. However later, it withdrew the application but court awarded costs of the application to the bank.
Simbamanyo challenged the award of the costs to the bank. On Tuesday, court dismissed the application and upheld the award of the costs to the bank.
Justice Christopher Madrama ruled that Simbamanyo Estates did not present to court acceptable grounds for the court to deny the bank the costs of the application.
“…the respondent (Equity Bank) upon being served, instructed lawyers and the lawyers took action to oppose the application by filing the appropriate affidavits in reply, as well as written submissions,” he ruled.
The ruling means that Equity Bank will now proceed and file a bill of costs payable by Simbamanyo. Advertisement
“The application for withdrawal was not conceded to unconditionally but was on condition of payment of costs. In the circumstances, therefore, the applicant (Simbamanyo Estates) application stands dismissed upon withdrawal,” Justice Madrama ruled.
He further noted that even if the application to stop the auction had proceeded to the hearing, court would have dismissed it too. He said stopping the sale of Simbamanyo mortgage properties would have infringed on the bank’s right to be heard and also inconvenienced those who prepared for the auction, which was advertised on September 8.
On October 8, Simbamanyo Estates filed an application seeking express orders to stay the sale of its properties, which took place on the same day.
On the same day, the bank sold Simbamanyo Building on Lumumba Avenue, and a four-star hotel in Nakawa Division. Simbamanyo Estates had petitioned court to stop the sale and takeover of its properties until its appeal challenging the order to 30 per cent of the loan had been concluded.
The case
The properties were presented to Equity Bank Uganda as security to get the loan in November 2017. On June 4 this year, the bank issued a notice of default to Simbamanyo demanding payment of $398,362 arrears. Simbamanyo Estates, through their lawyers of Muwema and Advocates, had sought to halt the intended sale.
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