What you need to know:
- The order resulted from a case in which businessman Haruna Sentongo had accused Orient Bank, now I&M Bank of duress and contracting him credit facilities with unfair terms and conditions.
The Commercial Division of the High Court has ordered businessman Haruna Sentongo to repay Orient Bank, now I&M Bank, Shs10.38b worth of mortgages.
In a December 23 ruling by Justice Richard Wejuli Wabwire, the court also awarded Orient Shs150m in damages and interest of above 22 per cent from the date of default until payment.
The ruling stems from two separate civil suits of 2018 and 2019, in which Mr Sentongo and Orient had filed against each other with respect to credit facilities extended to Mr Sentongo in 2015, to finance the development and completion of a commercial property known as Nakayiza Mall and another credit facility to finance the importation of garments.
However, in seeking to resolve the real issue efficiently, the court directed that the two applications be consolidated.
Court documents indicate that Mr Sentongo had accused Orient of extortion, duress, undue influence, and dishonesty, among others for contracting him into credit facilities with unfair and unclear terms and conditions with the purpose of unjustly enriching itself at his expense.
“The conduct of [Orient] … complicated [Mr Sentongo] performance and exposed him to excessive loss of income, the risk to exposure, psychological torture and mental anguish,” the documents read in part.
Therefore, Mr Sentongo had sought a number of remedies, among which included special damages of Shs500m for loss of business and rental income from February 2016 to date, and dismissal of Orient’s claims.
Mr Sentongo also argued that Orient was not entitled to recover any money from him on account that it had failed to prove its case at trial.
However, in its defence, Orient, through Mr Ronald Oine, argued that since May 2015 it had extended various credit facilities to Mr Sentongo, all of which were defaulted on before he asked that they be consolidated.
The consolidation returned a combined default position of Shs9.69b in addition to an overdrawn account to the tune of Shs184.9m, which amount continued to accrue interest, cumulating into an unpaid sum of Shs10.38b.
Orient also accused Mr Sentongo of diverting funds meant for developing Nakayiza Mall without notifying the bank yet he had mortgaged proceeds from the rent of the property as part of a repayment plan.
Court documents also indicated that even after the credit facilities had been merged, Mr Sentongo continued to default thus prompting the bank to issue demand notices, which were ignored.
Orient thus issued a notice of sale of the mortgaged properties but court documents indicate that Mr Sentongo sought permission to sell part of his properties to rectify the default position.
Orient granted Mr Sentongo permission, before selling part of the property for $700,000, of which $600,000, as had been agreed, would go to loan repayment with subsequent recoveries conducted in due course.
However, Mr Sentongo once again fell into default, which prompted Orient to advertise mortgaged properties for onward recovery of Shs10.38b, general damages and costs.
In his ruling Justice Wabwire indicated that he had weighed all submissions from both parties, noting that after a careful review, he had arrived at the conclusion that Orient was entitled to the remedies it had sought.
Dismissed Mr Sentongo case
Therefore, Justice Wabwire noted, Orient was right to seek damages given that it had been subjected to longer periods of non-repayment.
“The plaintiff, Mr Sentongo is indebted to the defendant, Orient Bank, in the sum of [Shs10,38b]. The plaintiff is directed to repay the entire sum,” he ruled, noting that Orient had suffered economic strangulation, and commercial distress, among others.
Justice Wabwire also dismissed Mr Sentongo’s case against Orient and awarded the bank interest on the outstanding sum of Shs10.38m and costs of the suit, among other remedies.