The Court of Appeal has ruled in favor of Stanbic Bank, dismissing a shs 287 billion case filed by Kenyan investor Lee Ngugi, the director of Western Highland Creameries Limited. The bank was accused of improper actions related to the sale of the company’s property.
Justices Fredrick Egonda-Ntende, Muzamiru Mutangula Kibeedi, and Christopher Gashirabake unanimously upheld the lower court’s decision, citing that Ngugi’s appeal lacked merit. The primary reason for dismissal was that the suit, filed in 2001, challenging the bank’s and MP Michael Mawanda’s actions, was time-barred.
Egonda-Ntende stated, “The learned trial judge found that the appellant’s suit was barred by law, rather than defeated by misjoinder or non-joinder of any party. I am not persuaded that he made any error. I, therefore, dismiss the appeal for lack of merit.”
The court emphasized that the suit was filed six years after the sale of the property, exceeding the time allowed by the Limitation Act. Additionally, the company’s submission challenging the bank’s receipt of $250,000 (sh946 million) in costs was also dismissed by the court.
This decision is a significant relief for Stanbic Bank, with their lawyer, Pope Ahimbisibwe, stating that the claim would have almost wiped away the bank’s gross profit for an entire year.
Background
In 1995, Western Highland Creameries Limited borrowed money from Stanbic Bank to finance its Milk Processing Plant in Mbarara. As collateral, the company pledged its land and machinery. When the company defaulted on repayment, the bank advertised and sold the security to recover the money, appointing Mawanda as a receiver.
Mawanda, following the Mortgage Deed, sold the company’s properties in 2001 to Alpha Dairy Products Limited. Subsequently, Alpha Dairy sold the land to Shumuk Properties Limited, the owner by the time Ngugi filed the suit in 2011.
Ngugi alleged breach of the mortgage deed, undervaluation of the land, and assets, claiming the transaction was tainted with fraud. The Commercial Court, dismissing the case on a technicality, stated it was filed out of time, a decision upheld by the Court of Appeal.
