law

The legal battle between Barclays Bank and Golf View Inn began six years ago.

In 2007, Golf View Inn secured a sh2.6b loan from Barclays Bank at an interest of 20% to be paid back in five years. This was after securing a tender from the Government to host a number of foreign diplomats who had come to participate at the Commonwealth Heads of Government Meeting (CHOGM) in Kampala.

It started after the High Court ordered Barclays Bank to refund sh500m that it charged Golf View Inn after they sold their hotel.

In 2009, the directors of Golf View Inn sued the bank, accusing it of deducting sh196m from their account. The money was paid to MMAKS Advocates as legal fees.

Last week, the hotel?s lawyer David Kaggwa petitioned the High Court, demanding the bank to refund the money.

?If they don?t refund the money with interest and the court does not stay execution, we shall attach the bank?s property,? said.

Efforts to get a comment from Micheal Kaddu, the head of corporate affairs at Barclays Bank Uganda were futile. However, the financial institution?s lawyer, Masembe Kanyerezi said the bank had filed a notice of appeal.

He further explained that under a commercial lending agreement, during recovery action, the bank is entitled to pass on the expenses to customers.

But lawyer Kaggwa disagreed, arguing that the commercial lending agreement is not compliant with the Advocate Act .

?The bank and its advocate executed an agreement which provided for a 6% remuneration. Court declared the said agreement null and void,? he said.

In her ruling, Justice Hellen Obura stated that it was illegal for Barclays Bank to debit its customer?s account and overcharged interest fees. She ordered the bank to refund sh16m at an interest rate of 25% from the time when the case was filed.

Nathanael Kasozi, a director at Golf View Inn said during the period of the loan recovery, the bank charged interest fees which caused losses to the hotel.

?In 2009, we were forced to sell the hotel at sh5.35b to settle the debt of about sh2.7b . When we deposited the money, the bank deducted sh196m, saying they were legal fees,? he said.

?The bank made it difficult for us to service the loan by overcharging the interest. They did not understand the project. Instead of adding some working capital in exchange for further securities, they only waned a recovery.

?The bank gave us four months to sell the property and we sold it in five days. It is surprising how they became entitled to legal fees.?

By Brian Mayanja, The New Vision

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