By Andrew Irumba
A judge in the Commercial Division of the High Court in Kampala has blocked attempts by businessman Patrick Bitature to side-step his South African creditors and take back shares and properties he had mortgaged to them earlier.
In the latest installment of a long-running legal dispute, Justice Ocaya Thomas on November 17,2023 issued an injunction stopping the Commissioner Land Registration from cancelling mortgages and land titles issued by the businessman and his companies as security for the loan he took from Vantage Mezzanine Fund II Partnership/Vantage Mezzanine Fund II Proprietary Limited.
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In the same orders, Justice Ocaya also stopped the Uganda Registration Services Bureau (URSB) from registering resolutions passed by Bitature’s company that would alter the commitments he made with the side lender from South Africa.
In a ruling by justice Thomas Ocaya, court said that if Bitature was to be allowed to change the shareholding of Simba Properties Investment Co. Ltd, Simba Telecom Ltd, Elgon Terrace Hotel Ltd and Linda Properties Ltd, it could render an eventual court ruling on the same non implementable.
Vintage sued the four companies together with Bitature, his wife Carol Bitature, Uganda Registration Services Bureau (URSB) and the commissioner of land registration.
“In the interests of justice, I find that the applicants ought to obtain the reliefs sought in order to preserve their action in the main suit. In the premises, I make the following orders, in the interests of justice: (a) An order issues preventing 1st respondent (commissioner land registration) from taking any actions or conducting any proceedings in respect of the certificates of title that the 2nd to 7th respondents mortgaged to the applicants, that would affect the applicants’ rights and the merits of the final arbitral award and its addendum pending court’s determination of the application for recognition and enforcement of the arbitral award,” the judgment reads in part.
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According to court records, Bitature obtained a loan facility of $10 million from Vantage but failed to pay in the scheduled time leading to a pile-up of interest, which he declined to pay. He then ran to court arguing that Vantage had no locus to sue him because it wasn’t legally operating in Uganda.
A number of court cases including an arbitration have all held that Bitature is liable to pay the said monies. Bitature also filed a case in court to stop the enforcement of the arbitral award. According to the loan agreements, Bitature mortgaged the said properties to get the $ 10 million loan. In the judgment, court found that Bitature wanted to change the shareholding of the companies so that by the time the final decision is issued, they would be in other hands.
“It is also not disputed that the 4th respondent (Elgon Terrace Hotel) filed a board resolution allotting 99400 shares to the 2nd (Simba Properties) and 6th respondent (Patrick Bitature). It is also not disputed that the 5th respondent (Linda Properties) filed a board resolution allotting 4900 shares to the 2nd respondent and the 3rd respondent (Simba Telecom). These resolutions are dated 14th August 2023 and 6th September 2023 respectively,” the court found.
Court also disagreed with the reasons of URSB and the commissioner land registration that if orders are issued to them not to register the new transactions on Bitature’s property, it would tantamount to topping a public entity from undertaking its constitutional duties.
“Unlike what was represented by the 1st respondent (commissioner land registration), the collection of information only facilitates the exercise of its powers under that provision. It follows therefore that, in respect of the proceedings before the 1st respondent, the applicants’ application is not premature as there is a real likelihood of mortgage or other entries entered in favour of the applicants being cancelled in exercise of the 1st respondents above stated powers. In respect of the 8th respondent (URSB), there is a real likelihood that the 2nd to 7th respondents may take further steps that affect the applicants’ claims, in light of the Mezzanine financing agreements and the securities provided for therein, including shareholding, since the 5th and 6th respondents have already taken steps before the 8th respondents which, the applicants contend contravenes the award and aims at frustrating its enforcement,” court ruled.