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London court orders Bitature to pay Shs244b
Businessman Patrick Bitature speaks at a recent function. PHOTO/FILE
What you need to know:
- Dead end? The International Chamber of Commerce Court of Arbitration in London, the United Kingdom, has ordered Ugandan businessman Patrick Bitature, his wife Carol Nzaro and four of their companies to pay South African lender, Vantage Mezzanine Fund, $65.7m.
- The dispute dates back to 2014 when Vantage reportedly lent Mr Bitature the money to invest in the 14-unit Moyo Close Apartments and the Skyz Hotel in Naguru, which were both still under construction.
Businessman Patrick Bitature has been ordered to pay back more than $65.7m (about Shs244b) to Vantage Mezzanine Fund II Partnership, a South African investment fund in default risks.
The orders were made by the International Chamber of Commerce Court of Arbitration in London by a sole arbitrator, Prof Fidfelis Oditah KC, SAN on July 31.
“The claimants (South African company) have succeeded in their claim, save in respect of damages for breach of contract, which I have not allowed but in respect of which a significant amount of effort was devoted, and are therefore, entitled to recover their reasonable costs from the respondents,” Prof Oditah held.
He added: “Second, I have had the regard to the respondent’s (Mr Bitature and his companies) obstructive and unreasonable approach to the arbitration, especially in pursuing unmeritorious and frivolous points regarding the Tribunal’s jurisdiction and the merits of the claim.”
This protracted legal matter ended up before the London Court of Arbitration. Efforts by Vantage to auction Bitature’s properties, including his hotels in the country, were frustrated by numerous legal suits that he pursued.
The properties are owned by Mr Bitature but were mortgaged under his real estate holding company, Simba Properties Investment Company Limited (Uganda).
The $10m (about Shs37b) loan had been guaranteed by Bitature’s Simba Telecom, Linda Properties Ltd, Elgon Terrace Hotel Ltd, and himself.
The dispute dates back to 2014 when Vantage reportedly lent Mr Bitature the money to invest in the 14-unit Moyo Close Apartments and the Skyz Hotel in Naguru, which were both still under construction.
The South African company claimed that neither the principal nor the entities have paid the loan. The claimant states that when they attempted to enforce the securities given to them in Uganda, Mr Bitature obstructed the process by engaging in various court proceedings.
They had further claimed that as of February 16, 2023, the Bitatures owed them more than $35m (about Shs130b) with the interest continuing to accrue in accordance with the facility agreement.
Efforts to get a comment from the businessman last evening were futile as he never picked our repeated phone calls to his known phone number. He did not also respond to our WhatsApp messages.
However, his lawyer, Mr Fred Muwema, said: “We are going to get an official position after speaking to our client before we can talk about the way forward.”
Mr Robert Kirunda, one of the lawyers for Vantage Mezzanine, said the “proceedings in the case and any decisions arising therefrom are confidential”.
Breakdown of the penalties
Prof Oditah ordered Mr Bitature in his individual capacity for breach of contract to pay $25.4m (about Shs94.4 billion).
“The fifth respondent (Mr Bitature) is liable to pay the first claimant (Vantage) $25,443,630.43 pursuant to his personal guarantee and indemnity with compound interest as the rate of 13 percent per annum with quarterly rests from 16 February 2023 to date of the award,” the arbitrator ruled. The court also ordered the businessman and his wife, Ms Carol Nzaro Bitature, to transfer forthwith to Vantage Mezzanine Fund II partnership (South Africa) 30,000 shares.
Turning to the Bitature’s companies of Simba Telecom, Linda Properties and Elgon Terrace Hotel, the arbitrator ordered them to pay the South Africans jointly $35,800,949.13 (about Shs133b) being a total of $35,443,630.43 (about Shs132b) outstanding balance as of 16 February 2023.
They were also ordered to pay $115,591 (about Shs430m) being pre-arbitration legal fees, disbursements and related costs and $241,727.7 (about Shs899m) being stamp duty paid in respect of the transfer of shares paid in by Bitature’s companies with compound interest at 13 percent per annum from February 16 to the date of the award.
Also, the court ordered Simba Telecom, Linda Properties and Elgon Terrace Hotel to pay $4m (about Shs15b) to the South Africans for breach of contract in relation to entry into KCB Facility and execution of the associated securities without the written consent of the South Africans.
Mr Bitature and all his companies, were also ordered to refund $257,000 (about Shs955m) advanced on costs by the South Africans plus 6 percent compound interest per annum with quarterly rests in respect of costs and expenses of arbitration, beginning from the date of the award.
They were also ordered to pay $213,523 (about 764m) and $36,030 (about Shs134m) in legal costs to the South Africans plus 6 percent compound interest per annum with quarterly rests.
The case that has been filed in different forms in different courts back in Uganda, resulting into various decisions on the changing pleadings such as at one time when the High Court ruled that Vantage had no right to sue anybody since it was not registered as a partnership in Uganda.
The other contention was that Vantage conducted lending business in Uganda without a licence in contravention of the Financial Institutions Act 2004 and that they conducted venture capital business without a licence.
But on June 16, 2021, Commercial judge Boniface Wamala, ruled that his court had no jurisdiction to hear any cases arising from the loan contract, adding that parties should go for arbitration as it had been spelt out in the loan agreement.
He referred the two parties for arbitration, leading to this decision in favour of the South African company.
