The High Court has dismissed an application by Frontier Logistics International (U) Ltd and its director, Monte Daniels Nkurunungi Monte, seeking to compel Absa Bank Uganda to produce a valuation report for land used as collateral for a loan.
Justice Susan Abinyo of the Commercial Division said Nkurunungi and his firm had failed to prove that the bank had the document they were demanding.
According to court records, Frontier Logistics applied for two banking facilities from Absa Bank in July 2016. As security for the loan, the company offered land located on Kibuga Block 4 Plot 890 at Namirembe in Kampala.
Nkurunungi, a director and shareholder in the company, guaranteed the loan personally. This meant that if the company failed to repay the money, he would be responsible for settling the debt.
Years later, Absa Bank sued Frontier Logistics and Nkurunungi in the High Court seeking to recover money the bank says is still outstanding.
While preparing their defence in that main case, Frontier Logistics and Nkurunungi filed a separate application asking the court to compel Absa Bank to hand over a copy of the valuation report for the Namirembe land.
Nkurunungi said the valuation report had been prepared before the loan was issued and that it formed the basis upon which the loan was approved.
He also said the report was important for their defence in the ongoing case.
“The valuation report was the basis upon which the loan was disbursed, and the reason why Absa guaranteed the same,” Nkurunungi said.
He told the court they needed the document to help prove allegations that the property may have been sold by the bank at a lower price.
His lawyer, Musa Semwogerere of SAN Law Advocates, argued that the report was material evidence in the dispute. He told the court that the document would help the applicants demonstrate alleged fraud or illegality in the way the land security had been handled.
But Absa Bank opposed the request and insisted it could not produce the document.
Through its lawyer, Brian Kajubi of MMAKS Advocates, the bank argued that the responsibility to obtain the valuation report had actually been placed on Frontier Logistics itself.
The bank relied on the loan facility letters issued in July 2016, which required the borrower to provide a valuation of the property offered as security.
In an affidavit filed by Esther Masawi Birungi, Absa’s head of business support and corporate affairs, the bank told the court it had searched its records but could not find the valuation report.
The bank also disputed the claim that the report was the main basis for granting the loan. Instead, the bank said it normally approves loans based on the borrower’s business viability.
“It is not true, as stated by the applicants, that the valuation report was the basis upon which the loan was disbursed,” the bank said.
Kajubi further argued that the report was not necessary to determine the key issues in the main case, which are whether Frontier Logistics owes the bank money and whether Nkurunungi’s guarantee is valid.
In her ruling, Justice Abinyo explained that a court can only order a party to produce documents that are in its possession, custody, or control.
Quoting earlier court decisions, she noted that a party cannot be compelled to produce documents that do not exist or that it does not possess.
“To be subject to production or inspection, the documents sought must be within the respondent’s possession, custody, or control,” she said.
Justice Abinyo also pointed out that the loan agreement placed the responsibility of obtaining the valuation report on Frontier Logistics.
“From the facility letters, it is discernible that the obligation to obtain the valuation report was upon the applicants (Frontier), and not the respondent (Absa),” she ruled.
She also rejected Nkurunungi’s claim that the loan had been granted mainly based on the valuation report, saying the assertion was not supported by evidence.
Although the court acknowledged that such a report could be relevant in proving allegations of fraud or undervaluation, Justice Abinyo ruled that the applicants had failed to satisfy all the conditions required for a discovery order.
“In the final result, this court finds that the applicants have not met all the above grounds of an order for discovery,” she ruled.
She dismissed Nkurunungi’s application and ordered that the costs would be determined when the main case is concluded.
