- Updated by Faith Barbara Namagembe at 1108 EAT on Saturday 21st May 2022.
Fred Muwema, the lawyer for businessman Patrick Bitature insists his client ‘signed by mistake’ the $10 million loan agreement with South African entity, Vantage Mezzanine Fund II Partnership.
Whereas Muwema acknowledged that indeed Bitature contracted a loan agreement and took money from Vantage, he says when it was discovered that this entity was illegally operating in Uganda, this contract effectively collapsed because an illegal entity can never do legal business anywhere in the world.
“The loan agreement was signed in 2014 by other lawyers, but when we came in as new lawyers, we audited the documents and we found that there was a mistake and we raised it…The criminality is in breaking the Ugandan law which says that a foreign partnership must register if it is not using its name. If you don’t register it’s a crime. It is there in the law. You’re supposed to go to jail if you do business as a foreign partnership in those circumstances – without registering. It is an offense…Now you, you commit a crime and you sign an agreement, you come here and do business, you don’t follow the laws of Uganda. The laws of Uganda say you must register, for you you refused and you give money, the laws of Uganda will catch you. Justice Ssekaana used the laws of Uganda, he didn’t dream up that judgement. The judgement, it quotes the law so if you’re having any arguments, you go and argue with parliament which made the law. It was a crime to break the Ugandan law, what more do you have to say.” Muwema said.
On May 9, High court judge Musa Ssekaana ruled that Vantage has no legal basis to sue anybody in Uganda. The entity had rushed to court seeking a judicial review over the decision by the Uganda Registration’s Services Bureau (URSB) to object the transfer of shares to them from four of Bitature’s companies that include; Simba Properties Investment Co. Limited, Simba Telecom Limited, Linda Properties Limited and Elgon Terrace Hotel Limited.
The attempt to transfer the shares arose after Bitature failed to meet his part in the agreement to pay back the loan he had contracted in 2014 to help in his real estate development. According to 2019 court filings, Vantage provided Bitature with $10 million and agreed to such terms that if he fails to pay this money, it would be turned into shares to Vantage.
The agreement also stated that, in case of any disagreements, these would be resolved through arbitration not court. That’s why High court judge Boniface Wamala earlier ruled that his court had no powers to hear the dispute and referred it to arbitration.
“We would have reached that stage [of arbitration] if Vantage was legal, but we cannot even go to that stage because the other man died, he doesn’t exist. We cannot speculate what he would have done if he lived. You can sign under mistake, you can think it is okay, and later when you come to your lawyer they tell you this is not allowed…Even the government of Uganda sometimes signs by mistake. The [coffee] agreement of [Enrica] Pinetti which [MPs] have destroyed in parliament, wasn’t it signed by a whole government? Didn’t government make mistakes. So if a government can make a mistake, you think you  can’t make a mistake and then go to a lawyer to advise you and say this was wrong. That is what happened,” he added.
“In the case of Sudhir [Ruparelia], didn’t he sign an agreement to pay Bank of Uganda; didn’t the Supreme court of this country nullify that agreement and said the receivership was illegal?” he asked. “There are also very many judgements to that effect. So, when you do an illegal agreement, even if we sign and even put figure prints, the agreement is illegal; it will be nullified whether you paid money or not. So now I have no opponent, I’m in the ring alone!”
Muwema added that after breaking the law, they, as law abiding citizens would not continue dealing with Vantage. The Monitor newspaper this week carried an advert in which Quickway Auctioneers and Court Bailiffs acting on behalf of Vantage, put up for auctioning Bitature’s properties if he fails to pay his creditors within 30 days. The advertised properties include Elisabeth Royal Apartments, Protea Hotel Naguru and Moyo Close Apartments; all managed under Simba Apartments.
Now Muwema insists that this was done with malice to soil the good name of Butature. He said although the arbitration process which was supposed to happen in London was yet to take off, they were stunned to read in the media that Vantage was moving to attach his client’s properties. On why the parties went to court in the first place, Muwema said the agreement was unfair to Bitature because it levied unconscionable interest rates.
“There are so many decided cases where the courts have cancelled loan agreements with excessive interest rates…So that will now be hurdle number two. If you jump the hurdle that you’re legal and you exist, now we go to the terms of the agreement. Everyday the Commercial court is examining the terms of agreements between banks and borrowers. Everyday Commercial court is full of those cases. So the court has powers to examine the agreement you signed with your bank and say was this fair because there are certain obligations a lender has to meet. There are certain rights a consumer/borrower is entitled to. So they examine and open up those agreements and if they find they are unfair, they are illegal and so on, they cancel them or they reduce the interest or the amount,” he said.
In court, Bitature had also objected to taking the case to arbitration, arguing that that particular clause was included in the loan agreement under duress but the judge wouldn’t have any of this. He scornfully ruled: “In my view a feeble claim of duress and/or undue influence of the nature as this one amounts to an insult of own intelligence on the part of the Respondents and their advocates.”
However, Muwema said unfair agreements are a common thing even to big entities like governments. He added that if the judge had interrogated the issue further, he would have realised that indeed there was undue influence.
“The judge should have heard the issue of undue influence, undue influence is not heard in an application, the judge should have put people on the stand and called evidence. It wasn’t a full hearing and what for us we’re saying; can the judge hear the issue of duress in a full hearing, the issue of illegality in full hearing…the court refused but just made a comment that there was no duress and so on but it was not subjected to a trial,” Muwema added.